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Genesis creditors take legal action against Barry Silbert and DCG for securities violations

Genesis Capital

Digital Currency Group (DCG), a Connecticut-based cryptocurrency firm, is facing a new class-action lawsuit from creditors of its subsidiary, Genesis Capital.

The securities class action (SCA) lawsuit was filed by Connecticut-based law firm Silver Golub & Teitell (SGT) on behalf of individuals and entities who entered into digital asset lending agreements with Genesis.

The complaint against DCG and CEO Barry Silbert alleges that Genesis engaged in an unregistered securities offering in violation of securities laws by executing lending agreements involving securities without qualifying for an exemption from registration under the federal securities laws.

The lawsuit also alleges that Genesis committed securities fraud through a scheme to defraud potential and existing digital asset lenders by making false and misleading statements.

This news comes amid Genesis going through its first bankruptcy hearings after the firm filed for bankruptcy on Jan. 19, 2021.

The bankruptcy filing came a few months after Genesis halted withdrawals on Nov. 16, 2020 as it became unable to honor redemption requests amid the bear cryptocurrency market.

Gemini, a crypto trading platform founded by Winklevoss brothers, is one of the biggest creditors of Genesis, with the firm reportedly owing $900 million to Gemini’s clients.

On January 20, 2021, Gemini co-founder Cameron Winklevoss announced that the firm has been preparing to take direct legal action against DCG, Silbert and “others who share responsibility for the fraud.”

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