DCG Urges Judge to Consolidate Class-Action Suits for Better Outcomes
- Digital Currency Group (DCG) and CEO Barry Silbert seek to consolidate two class-action lawsuits over alleged losses during the crypto winter.
- Defendants argue that the cases arise from the same facts and present similar legal issues, proposing consolidation to avoid conflicting decisions and promote judicial efficiency.
- DCG closes down TradeBlock due to the uncertain regulatory environment and the state of the broader economy in the US.
Venture capital firm Digital Currency Group (DCG) and its CEO Barry Silbert have recently requested to consolidate two class-action lawsuits over alleged losses during the crypto winter.
In a letter sent to United States District Judge Stefan Underhill in Connecticut on May 10, 2023, the defendants argued that both cases “arise from the same facts, present overlapping legal issues, and propose nearly identical class definitions.” However, the plaintiffs in Connecticut opposed the move, arguing that it is premature to decide before the New York case gets approved for transfer. They are also expecting the plaintiffs in New York to oppose the transfer because of the uncertainty surrounding the nature and scope of the claims.
But what are the claims, exactly? According to the lawsuit in Connecticut, Silbert orchestrated a misleading transaction to conceal signs of a $1.1 billion implosion after Three Arrows Capital (3AC) began liquidation proceedings. The defendants face allegations of committing securities fraud for making misleading or false statements.
In light of these ongoing legal battles, DCG has decided to close its prime brokerage subsidiary TradeBlock. While the firm has not commented on the exact reason for its decision, it cited the state of the broader economy and the uncertain regulatory environment for crypto in the United States as factors. It’s important to note that this comes after DCG had made several significant investments in TradeBlock, including a $5 million Series A funding round in 2021.
The defendants also argued that consolidating the cases would be necessary to avoid conflicting decisions and promote judicial efficiency. In the letter, the defendants informed Underhill that they had asked U.S. District Judge Lewis Liman to transfer the case from New York to Connecticut. If the motion is granted, Defendants intend to quickly move to consolidate both actions. The motion will be fully briefed no later than June 13, 2023.
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