Last Updated: 25 January 2023
More headaches for cryptocurrency group Digital Currency Group (DCG) and its CEO Barry Silbert. A group of US creditors has launched a lawsuit against subsidiary Genesis, which recently had to file for bankruptcy.
Genesis creditors file securities lawsuit against Barry Silbert and DCG https://t.co/uvtcQUCLuR
— Cryptoprenure (@Cryptoprenure) January 24, 2023
Creditors in action
The charge is that Genesis flouted federal securities laws, according to the press release. The charges come from law firm Silver Golub & Teitell (SGT), which has launched these proceedings on behalf of several individuals and companies.
They gave crypto currencies such as bitcoin to Genesis to make a return on them and Genesis has not yet returned these coins. It is what amount is at stake. The creditors now claim that Genesis acted in violation of US securities laws. Namely, they entered into an unlicensed loan agreement with a security as collateral. They also accuse Genesis of making false and misleading statements.
DCG, founded in 2015 in Connecticut, acts as a flagship for numerous activities such as asset manager Grayscale Investments, mining company Foundry and media company Coindesk. CEO Barry Silbert holds a 40% stake in the company and is chairman of the board. Last Monday was the first bankruptcy hearing after the company filed for bankruptcy on 19 January.
Gemini is one of the largest creditors Genesis, reportedly claiming around $900 million from 340,000 Gemini customers. They too have threatened to sue, but so far it has not come to that. Dutch Bitvavo is also still negotiating with DCG, but has not yet struck a deal for the €280 million they had deposited with Genesis.