Class Action Suit Filed Against Genesis Global Capital and Digital Currency Group – Alleged False Transaction

Three Gemini Earn users have taken legal action against Genesis Global Capital (GGC) and its parent company, Digital Currency Group (DCG). They allege that the companies have violated a contract and are accusing them of carrying out a fraudulent transaction.

“A wrongful act”

The American Arbitration Association (AAA) has received a class action arbitration case against Genesis Global Capital (GGC), Digital Currency Group (DCG), and Genesis Global Trading. Silver Golub & Teitell, the law firm representing the plaintiffs, issued a statement stating that the defendants have breached the terms of the Framework Agreement.

According to the complaint filed on December 30, 2022, GGC went into insolvency during the summer of 2022 but concealed it from lenders. The plaintiffs claim that the company was able to do this by setting up a simulated transaction. DCG purportedly bought the right to collect a $2.3 billion debt owed by the insolvent Three Arrows Capital to GGC for a note of $1.1 billion that is due in 2033.

Genesis Global Capital accused of unregistered securities sale

The plaintiffs have asserted that GGC’s refusal to recognize or resolve the insolvency is a breach of contract. They allege that the insolvency was an act of bankruptcy, and that the resulting event of default automatically terminated the loan agreements between the plaintiffs and GGC, triggering GGC’s obligation to return the digital assets of the plaintiffs.

As previously reported by Bitcoin.com News, affiliate Genesis Global Trading (GGT) stopped new loan origination and withdrawals on November 16 and, according to a company spokesperson, this decision was taken “in response to extreme market dislocation and industry trust.” The same spokesperson stated that the decision had no effect on DCG or other entities.

In addition to the claims of breach of contract, the plaintiffs also allege that “all transactions made pursuant to the Master Agreement constituted unrecorded sales of securities.” The plaintiffs are seeking to have the sales contracts terminated.

What do you think about the allegations? Let us know in the comments section below.