On Jan 20, Genesis filed for bankruptcy and hoped to reach a deal with its creditors. Digital Currency Group (DCG) and its subsidiary, Genesis Capital, fell into the pit with another class action lawsuit.

Genesis Group’s Creditors have filed for a securities class action (SCA) lawsuit against DCG and Barry Silbert, its founder and CEO Barry Silbert, for violating federal securities laws.

Connecticut-based law firm Silver Golub & Teitell (SGT) filed the lawsuit against the firm representing the individuals and entities who formed digital asset lending agreements with Genesis. SGT handled various major industry lawsuits earlier; it prosecuted the case against Coinbase in March 2022.

Securities fraud has also been committed by Genesis, as per the lawsuit, to defraud potential and existing digital asset lenders and shared wrong and deceiving statements. Moreover, as per the reports, Genesis never shared any true picture of the company’s financial condition, which violated section 10(b) of the United States’ Securities Exchange Act.

SGT’s lawyer said, “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.”

DCG was founded in 2015 and has served as a parent company to various firms such as a crypto mining firm Foundry, digital asset manager Grayscale, Grayscale investments, and crypto media outlet Coindesk. The chairman of the board of directors of DCG is Silbert, who also controls and maintains a 40% equity stake in the company.