DCG Fights Back: Alleges Unfair Play in Genesis Settlement

You are here: Home / News / DCG Fights Back: Alleges Unfair Play in Genesis Settlement

DCG

Digital Currency Group, or DCG, has alleged unfair play in the recent settlement case between its subsidiary Genesis and the New York Attorney General [NYAG]. According to the recent filing, DCG contended that Genesis has violated U.S. bankruptcy law “by taking value from the underclass and redistributing it to senior creditors under the garb of settlement.”

Earlier this month, Genesis Global negotiated a resolution with the attorney general’s office to resolve allegations that it duped investors. NYAG filed a lawsuit against Genesis, DCG, and its officials, alleging fraud charges totaling more than $1.1 billion in October last year.

Jason Brown, a former co-chief deputy in the Attorney General’s Office, also threw his weight behind DCG’s opposition, claiming in court filings that the details of the settlement may not have been properly finalized, calling it a “cowardly attempt to circumvent U.S. bankruptcy law” in a court filing.

DCG

A few weeks ago, DCG criticized Genesis for handing out excess payouts to its customers. The bankrupt lending firm is working on its liquidation plans after failing to reach settlements with DCG, its former business partner Gemini, and regulators suing the three companies over their business practices.

In response, its parent firm argued that “it cannot support a plan that is unlawful and deprives of its corporate governance rights” and asserted that it would continue to fight against the New York prosecutors’ claims while ensuring that funds are recovered under bankruptcy regulations.

DCG’s Fate On Feb 26

The bankruptcy court is set to consider the NYAG settlement on February 26. The regulator also amended its original complaint to include new fraud allegations against DCG, its CEO, Barry Silbert, and Genesis. The alleged fraud at Gemini Trust and Barry Silbert’s Digital Currency Group was three times bigger than initially thought, the New York attorney general said in the revised civil complaint.

Previously, Genesis, a crypto brokerage firm, also settled with the U.S. Securities and Exchange Commission [SEC], bringing an end to a year-long legal battle concerning its Earn product. The company agreed to pay a $21 million civil penalty to resolve the litigation and benefit the debtors’ estates.