The now-defunct crypto lender Genesis filed two lawsuits against its parent company, hoping for a recovery.
By Wahid Pessarlay
Editor Julia Sakovich
Updated
2 mins read
Genesis Global Capital, a major cryptocurrency lender, filed two lawsuits against Digital Currency Group, its parent company, and CEO Barry Silbert to potentially recover over $3 billion.
The filings include a $1.1 billion promissory note and over $1.2 billion in allegedly improper transfers.
The now-defunct institutional crypto lender, with over 100,000 creditors, claims that DCG and its affiliates transferred billions of dollars worth of crypto and fiat assets from Genesis while the company was insolvent.
Genesis claimed in the lawsuit that DCG issued a fake 10-year promissory note, worth $1.1 billion, to conceal a massive hole in its balance sheet caused by the collapse of Three Arrows Capital, a Singapore-based crypto hedge fund that collapsed in June 2022.
The fallen crypto lender accuses DCG and Silbert of misleading investors about Genesis’ financial condition, particularly during the 2022 market turmoil, to prevent a bank run and protect their interests.
According to the filing with the Delaware Chancery Court, Genesis was insolvent by December 2021, but its bankruptcy surfaced in January 2023. Despite knowing this, DCG continued using the lender to fund its operations.
Moreover, the lawsuits highlight the importance of transparency and proper financial management within crypto firms.
In January this year, DCG faced a $38 million fine from the US Securities and Exchange Commission (SEC) for misleading investors.
If Genesis wins in the lawsuits, it could not only repay its high-profile creditors but also compensate for the losses of retail investors. It’s important to note that such lawsuits usually have lengthy processes.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Wahid has been analyzing and reporting on the latest trends in the decentralized ecosystem since 2019. He has over 4,000 articles to his name and his work has been featured on some of the leading outlets including Yahoo Finance, Investing.com, Cointelegraph, and Benzinga. Other than reporting, Wahid likes to connect the dots between DeFi and macro on his newsletter, On-chain Monk.
