Genesis Creditors Sue DCG And Barry Silbert In Class Action Lawsuit

Key Points:

• Genesis creditors are suing Digital Currency Group (DCG) and its CEO Barry Silbert for allegedly breaking federal securities laws.
• The lawsuit was filed in the U.S. District Court for the District of Connecticut by creditors who loaned their digital assets to Genesis between Feb. 2, 2021, and Nov. 16, 2022.

According to a news statement on January 23, Genesis (GN) creditors are suing Digital Currency Group (DCG) and its CEO Barry Silbert for allegedly breaking federal securities laws.

In compliance with federal securities regulations, the class action lawsuit seeks to hold GN‘ parent company, DCG, and Silbert accountable as “Control Person(s)”; GN filed for bankruptcy last week. DCG is the defendant in the class action complaint.

Class action lawsuit

The lawsuit was filed in the U.S. District Court for the District of Connecticut by creditors who loaned their digital assets to Genesis between Feb. 2, 2021, and Nov. 16, 2022.

The lawsuit alleges that Genesis engaged in an unregistered securities offering. Thereby, GN violated the Securities Act by executing lending agreements involving securities without qualifying for an exemption from registration under the securities laws, as per the press release. 

Furthermore, the complaint alleges that Genesis committed securities fraud by making false and misleading statements about its financial condition.

Law firm Silver Golub & Teitell LLP — which is representing GN creditors in the lawsuit — noted:

“The scheme to defraud was carried out, according to the Complaint, in order to induce prospective digital asset lenders to loan digital assets to Genesis Global Capital and to prevent existing lenders from redeeming their digital assets.”

It is unclear at the moment whether Gemini Earn users — who have the largest claim against Genesis for $765.9 million — are part of the class action lawsuit.

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