Digital Currency Group (DCG) and its CEO, Barry Silbert, have made a request to consolidate two class action lawsuits that the company is currently facing related to alleged losses during the ‘crypto winter.’
DCG and Silbert, in a letter addressed to United States District Judge Stefan Underhill in Connecticut, argued that both lawsuits share hare the same underlying facts and involve similar legal challenges, and propose similar class classifications. They emphasized that consolidating the cases would prevent conflicting judgments and promote judicial efficiency.
They also informed Judge Underhill that they have requested the transfer of the New York case, initially filed with U.S. District Judge Lewis Liman, to Connecticut. They stated that the motion for transfer would be fully briefed by June 13, 2023, and if the motion is granted, they anticipate the prompt consolidation of both lawsuits.
However, the plaintiffs from Connecticut objected to the transfer, arguing that a decision should not be reached until the New York case receives permission to do so. They also anticipate opposition from the plaintiffs in New York due to the lack of clarity regarding the nature and extent of the claims.
The first lawsuit, filed in Connecticut, is sponsored by a group of Genesis creditors. They claim that DCG and its subsidiary, Genesis Capital, violated federal securities laws by engaging in an unregistered securities offering. They also claim that Silbert orchestrated a deceptive deal to conceal a $1.1 billion collapse after the initiation of the liquidation process by Three Arrows Capital.
The second lawsuit, filed in New York, alleges that Genesis attempted to hide its insolvency through a “sham transaction” involving loans owed by the now-defunct cryptocurrency hedge fund Three Arrows Capital.
In response to the ongoing legal actions, DCG has decided to shut down its main brokerage business, TradeBlock. The company stated this decision was influenced by concerns regarding the overall economic health and the uncertain legal landscape surrounding cryptocurrencies in the United States. The formal shutdown process for TradeBlock began on May 31, 2023.
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