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id: 471, Created by Stan Vick Chase, Scout

Investors are to fight back frozen assets by Genesis

On November 22, 2022, Crypto Broker/Exchange Genesis warned about Bankruptcy without funding.

"Our goal is to resolve the current situation consensually without the need for any bankruptcy filing," a Genesis spokesperson previously said in an emailed statement to Reuters, adding it continues to have conversations with creditors.

  • Ealier, The Wall Street Journal reported, citing sources, that Genesis had approached Binance seeking an investment but the crypto exchange decided against it, fearing a conflict of interest. Genesis also approached private equity firm Apollo Global Management for capital assistance, the WSJ said.
  • On November 16, 2022, Genesis suspended withdrawals within its lending unit and blamed the recent collapse of exchange FTX for spurring a spike in withdrawal requests that exacerbated the lender’s liquidity.
Despite the general negative market conditions for crypto assets after the FTX collapse, Investors and Genesis' Clients have every reason to suspect that the financial institution has not done everything possible, as required by law and regulations, to fulfill its fiduciary duties to stakeholders.
Alleged Offence
Misleading Statements
Financial Misrepresentation
Failure to Disclose
Breach of Fiduciary duty
Suspected Party
Service Provider
Hedge Fund
Security Type
Crypto Asset
Trade Direction
Shock Event Date
22 November 2022
Case number
3:23-cv-82 (SRU)
Filing date
23 January 2023
Class period Start
02 February 2021
Class period End
16 November 2022
District of Connecticut
Hon. Stefan R. Underhill
Created by Stan Vick Chase, Scout

Case history

Silver Golub & Teitell LLP
31 December 2022
On Friday, December 30, 2022, at approximately 1:50pm EST, Silver Golub & Teitell LLP (SGT) filed a demand for class arbitration on behalf of three Gemini Earn users (the “Claimants”) seeking to represent a class of similarly situated individuals and entities against Genesis Global Capital, LLC (“GGC”), Digital Currency Group (“DCG”), and Genesis Global Trading, Inc. (“GGT”) with the American Arbitration Association (“AAA”).

Claimants have brought claims against GGC and related entities for breach of contract and the unregistered sale of securities and seek relief related thereto and the filing is available here:

Claimants’ filing alleges that GGC first breached the Master Agreement when GGC became insolvent in the summer of 2022 but concealed its insolvency from lenders such as Claimants. GGC concealed the insolvency in part, the demand alleges, by orchestrating a sham transaction with its parent company, DCG, whereby DCG “bought” the right to collect a $2.3 billion debt owed to GGC by insolvent hedge fund Three Arrows Capital for a promissory note of $1.1 billion due in 2033. GGC’s alleged insolvency, failure to cure the insolvency, and continued representations that it was not insolvent breached the Master Agreement and constituted Events of Default which automatically terminated the loans between Claimants and GGC thus triggering GGC’s obligation return Claimants’ digital assets.

Claimants also allege that GGC further breached the Master Agreement beginning on November 16, 2022, as GGC has refused to return Gemini Users’ digital assets despite Gemini Users’ requests for redelivery of loaned assets pursuant to the Master Agreement and failed to pay Gemini Earn users the interest payments due under the Master Agreements at the end of November.
Finally, Claimants allege that all transactions entered into pursuant to the Master Agreement constituted unregistered sales of securities for which no exemption from registration applies and seek to rescind the contracts of sale and related damages on that basis.

Claimants filed their demand for class arbitration with the American Arbitration Association pursuant to the Master Agreement in effect at the time of filing seeking to arbitrate Claimants’ dispute pursuant to the AAA Commercial Arbitration Rules and the AAA Supplemental Rules for Class Arbitration, which supplement all sets of AAA rules. AAA rules explicitly authorize class arbitrations under appropriate circumstances. Subject to arbitrator approval to proceed as a class arbitration, Claimants’ action seeks to obtain relief for all Gemini Earn users whose funds are current trapped with GGC.

Silver Golub & Teitell LLP
03 March 2023
On January 23, 2023, Silver Golub & Teitell LLP ("SGT"), a plaintiffs' law firm based in Stamford, Connecticut filed a securities class action against Digital Currency Group, Inc. ("DCG") and DCG founder and chief executive officer Barry Silbert ("Silbert") in the United States District Court for the District of Connecticut alleging violations of the federal securities laws. SGT's clients seek to represent two putative classes of individuals and entities who loaned digital assets pursuant to lending agreements to DCG's wholly owned subsidiary Genesis Global Capital, LLC from February 2, 2021 through November 16, 2022 (the "Class Period").

On November 16, 2022, Genesis Global Capital announced it would no longer honor redemption requests from lenders who loaned Genesis Global Capital digital assets due to what Barry Silbert called "an issue of liquidity and duration mismatch in the Genesis loan book." On January 19, 2023, Genesis Global Capital and two related entities filed for Chapter 11 bankruptcy protection.

Digital Currency Group is a Stamford, Connecticut-based corporation that serves as the parent company of a conglomerate of digital asset and blockchain technology focused subsidiaries, including Genesis Global Capital. Barry Silbert founded Digital Currency Group in 2015 and maintains a controlling 40% equity interest in DCG. Silbert currently serves as DCG's chief executive officer and chairman of its board of directors.
SGT's clients' complaint (the "Complaint") seeks to hold DCG and Silbert liable in their capacity as "Control Person(s)" pursuant to Section 15 of the Securities Act of 1933, 15 U.S.C. § 77a (the "Securities Act") and Section 20 of the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq (the "Exchange Act") for Genesis Global Capital's alleged violations of the federal securities laws.
The Complaint alleges that 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.

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 scheme to defraud was carried out, according to the Complaint, in order to induce prospective digital asset lenders to loan digital assets to Genesis Global Capital and to prevent existing lenders from redeeming their digital assets.

If you wish to serve as Lead Plaintiff for the Classes, you must file a motion with the Court no later than 60 days from date of publication of this notice. Any member of the proposed Classes may move to serve as the Lead Plaintiff through counsel of their choice.

You may obtain additional information about this lawsuit and your ability to become a Lead Plaintiff by contacting SGT Partner Ian W. Sloss at [email protected] or by telephone at (203) 325-4491. The Action is titled McGreevy, et al. v. Digital Currency Group, et al., No. 23-cv-00082 (D. Conn.).
Stan Vick
24 May 2023
Status: Lead Plaintiffs & Legal Councels Appointed
Case №: 23-cv-00082
Court: District of Connecticut
Judge: Hon. Stefan R. Underhill
Description: The case is in the court of the District of Connecticut. Several Lead Plaintiff applications have been submitted to the court.
  • On April 25, 2023, the Judge appointed Lead Plaintiffs who will represent the Class.
  • Also, the Judge approved Kaplan Fox & Kilsheimer LLP and Silver Golub & Teitell LLP as Lead Counsels.
Related News: On May 22, 2023, Digital Currency Group, the owner of the bankrupt crypto lender Genesis Global Capital LLC, failed to repay about $630 million of debt owed to its subsidiary by a mid-May deadline, according to Gemini. (Source: Bloomberg)

Genesis Global Trading, Inc

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