A new class action lawsuit has been filed against cryptocurrency corporation Digital Currency Group (DCG), making the company’s legal woes even more numerous. The lawsuit was filed against DCG’s subsidiary, Genesis Capital.

In a securities class action (SCA) lawsuit against DCG and its founder and CEO Barry Silbert, Genesis creditors allege that the defendants violated the laws governing the buying and selling of securities in the United States.

On behalf of the individuals and companies that entered into digital asset lending agreements with Genesis, the Connecticut law firm Silver Golub & Teitell (SGT) filed the action. The plaintiffs in the case are seeking compensation for their losses.

The law firm is known in the industry for handling major litigation, such as the class action lawsuit that was filed against Coinbase in March 2022.

In the new complaint filed against DCG and Silbert, Genesis is alleged to have engaged in an unregistered securities offering in violation of securities laws. Specifically, Genesis is alleged to have violated securities laws by executing loan agreements involving securities without first qualifying for an exemption from registration under the federal securities laws.

The complaint also claims that Genesis engaged in securities fraud by devising a scheme to deceive existing and new digital asset lenders by providing false and misleading representations. It is said that this occurred as part of a strategy to steal money.

The plaintiffs allege that Genesis knowingly misrepresented the company’s current financial condition, in violation of section 10(b) of the United States Securities Exchange Act. “The scheme to defraud was carried out, according to the complaint, to induce potential digital asset lenders to lend digital assets to Genesis Global Capital and to prevent existing lenders from redeeming their digital assets,” SGT’s lawyers noted. “The aim of the scheme was to induce potential digital asset lenders to lend digital assets to Genesis Global Capital.”

DCG is a Connecticut-based cryptocurrency company that was established in 2015. It functions as the parent company of several subsidiaries focused on blockchain and digital assets, some of which include Genesis, a digital asset manager called Grayscale Investments, a mining company. of cryptocurrencies called Foundry. , and a cryptocurrency news outlet called Coindesk.

Silbert, the current CEO of DCG, holds a forty percent majority stake in the company and also serves as Chairman of DCG’s board of directors.

The announcement was made as Genesis was in the midst of its first bankruptcy proceedings on January 23, following the company’s first bankruptcy filing on January 19.

The bankruptcy petition was filed a few months after Genesis temporarily suspended withdrawals on Nov. 16 because the company had been unable to execute redemption requests in light of the cryptocurrency bear market.

It has been revealed that Genesis owes $900 million to clients of the Gemini cryptocurrency trading platform, which was established by the Winklevoss brothers. Gemini is one of the most important debtors of Genesis.

Cameron Winklevoss, one of Gemini’s co-founders, took to Twitter on January 20 to announce that the company was ready to take direct legal action against DCG, Silbert, and “those who share the culpability for the scam.”