YEREVAN (CoinChapter.com) – The Genesis DCG Lawsuit might be resolved in 2024, per court filing on Nov. 28. Here are more details on the court proceedings, the reasons behind the initial filing, and the connection between Genesis and DCG.
Genesis DCG Lawsuit at a Close?
Genesis, a bankrupt crypto lender operating under the Digital Currency Group (DCG), reached a significant agreement to settle a lawsuit in which it was seeking $620 million in repayments from DCG.
According to a court filing on Nov. 28, DCG agreed to repay $324.5 million by April 2024, resolving a part of the dispute. This deal is beneficial for Genesis as it avoids the costs and distractions of prolonged litigation.
This repayment agreement is a critical step in Genesis’ larger strategy to reimburse its creditors. As part of this strategy, Genesis also aimed to reduce a claim against another firm, Three Arrows Capital (3AC), from $1 billion to $33 million. The resolution of this dispute is subject to the approval of Genesis’ creditors and Judge Sean Lean.
Legal Challenges With Gemini and Regulatory Bodies
Genesis has also filed a lawsuit against Gemini to recover nearly $670 million in transfers. This lawsuit occurs in the context of other legal challenges, including a Securities and Exchange Commission (SEC) lawsuit accusing Genesis and Gemini of selling unregistered securities.
Additionally, authorities in New York have filed a lawsuit against Genesis, Gemini, and DCG, alleging investor fraud. These legal entanglements form a complex web of lawsuits and financial restructuring for Genesis and DCG.
The lawsuit from New York authorities includes charges against Genesis, its former CEO Soichiro Moro, DCG, and DCG’s CEO Barry Silbert. They are accused of defrauding investors and the public by allegedly concealing more than $1.1 billion in losses. This concealment led to investors bearing these losses. The New York Attorney General’s lawsuit suggests that Genesis committed intentional deception under the direction of DCG.
The Origins of Genesis DCG Lawsuit
Genesis filed for bankruptcy after months of insolvency issues. In detail, the company was hit hard by Terra’s collapse in May, which brought down 3AC, a firm tied to Genesis.
Genesis also borrowed funds from Gemini and, after the 3AC implosion, could not pay them back, impacting Genesis Earn platform clients, who collectively lost millions. Moreover, Gemini and Genesis are sister companies as well as subsidiaries of crypto giant DCG.
Before the Genesis vs DCG lawsuit, Gemini executive Cameron Winklevoss called out DCG and Silbert personally for fraudulent accounting. Winklevoss also accused Silbert of putting personal gain ahead of client interests. He then led Earn clients into a class action arbitration against DCG and Silbert.
To be clear, this mess is entirely of your own making. [DCG] owes Genesis (its wholly owned subsidiary) ~$1.675 billion. This is money that Genesis owes to Earn users and other creditors. You took this money […] to fuel greedy share buybacks and kamikaze Grayscale NAV trades.
said Winklevoss in an open letter to Silbert.
Thus, the origins of the Genesis DCG lawsuit go back to the Terra implosion, and the subsequent contagion. If DCG pays the settlement in April 2024, unfortunate investors might eventually see their money back.
