Genesis creditors are suing Digital Currency Group (DCG) and its CEO, Barry Silbert, for alleged violations of federal securities laws, according to a Jan. 23 press release.

The class action lawsuit seeks to hold DCG and Silbert liable as “Controlling Person(s)” under federal securities laws: DCG is the parent company of Genesis, which filed for bankruptcy last week.

class action lawsuit

The lawsuit was filed in the US District Court for the District of Connecticut by creditors who lent their digital assets to Genesis between February 2, 2021 and November 16, 2022.

The lawsuit alleges that Genesis participated in an unregistered securities offering. Therefore, Genesis violated the Securities Law by executing loan agreements involving securities that did not qualify for an exemption from registration under the securities laws, according to the press release.

Additionally, the complaint alleges that Genesis engaged in securities fraud by making false and misleading statements about its financial condition.

The law firm Silver Golub & Teitell LLP, which is representing Genesis creditors in the lawsuit, noted:

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

It is unclear at this time if 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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