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The digital money group (dcg) and its founder Barry Silbert were prosecuted after their subsidiary failed last week.
The Digital Currency Group (DCG) and its founder Barry Silbert were sued after their Genesis affiliate went bankrupt last week.
The complaint seeks to hold dcg and silbert responsible as "person(s) of control," the law firm stated. It alleges:
They are also charged with outright fraud, echoing the Winklevoss twins' complaint of misrepresentation.Genesis Global Capital engaged in an unregistered securities offering in violation of Section 5 of the Securities Act by executing lending agreements with SGT’s clients and members of the putative classes that fit the definition of securities without qualifying for an exemption from registration under the federal securities laws.”
In addition they’re being sued for outright fraud, echoing the complaint of the Winklevoss twins who allege misrepresentation.
“The Complaint also alleges that Genesis Global committed securities fraud through a scheme to defraud prospective and current digital asset lenders by making false and misleading statement that intentionally misrepresented the financial condition of Genesis Global Capital in violation of Section 10(b) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder.
The fraud scheme has been completed, complaint-driven, to encourage potential lenders of digital assets to lend digital assets to generate global capital and to prevent existing lenders from buying back digital assets.”
Genesis processed billions in crypto backed loans to numerous clients, including institutional clients as well as the now bankrupt Three Arrow Capital (3AC) hedge fund.
They lost roughly $1.1 billion at 3ac.
DCG and Barry Silbert claimed to have taken over this loss through a $1.1 billion promissory note, allowing Genesis to continue operations for another five months.
The failure of ftx resulted in additional losses of $150 million initially, an amount that turned out to be too much with the transactions suspended in November.
Thereafter, instead of covering losses 3 ac, it turned out that this promissory note is due within a decade and that the genesis has a hole of approximately 2 billion dollars, bankrupting them. Thereafter, rather than covering 3AC losses in real terms, it turned out that this promissory note arrives in 10 years and that Genesis has a hole of approximately 2 billion dollars, bankrupting them.
