Genesis Subpoenaed by New York Court in TerraUSD Collapse Investigation
A New York court has issued a subpoena to Genesis, the troubled crypto lender, demanding the production of documents related to the collapse of the algorithmic stablecoin TerraUSD (UST) last year. The court order, dated October 13, highlights Genesis’s failure to respond to subpoenas issued by Terraform Labs on September 12. Judge Jed Rakoff granted the motion to enforce the subpoenas and ordered Genesis to produce responsive documents within five days. Genesis is among several crypto lending and trading firms that suffered losses after FTX and Alameda Research collapsed in November 2022 due to their exposure to these companies.
Terra Investigations
The U.S. Securities and Exchange Commission (SEC) has launched investigations into Terraform Labs and its founder Do Kwon for allegedly misleading investors. The SEC claims that LUNA, the token associated with Terra, was an unregistered security, and accuses Kwon of manipulating trading volume on the blockchain. Kwon is currently incarcerated in Montenegro for possessing a fake U.S. passport. Judge Rakoff is seeking information from Kwon despite his imprisonment, emphasizing that he cannot make any statements in the case without being available for cross-questioning.
Genesis’s Legal Battle and Downsizing
Genesis has also filed a lawsuit against its parent company Digital Currency Group (DCG) for failing to repay $620 million in loans. After declaring bankruptcy in January, Genesis had to reduce its workforce by 30%. In addition, the company announced the discontinuation of its U.S. spot market trading operations in September for unspecified business reasons.
Hot Take: Genesis Faces Legal Pressure Amidst TerraUSD Probe
The New York court’s subpoena adds another layer of legal pressure on Genesis as it navigates the aftermath of the TerraUSD collapse. With ongoing investigations into Terraform Labs and Do Kwon, the spotlight is on Genesis to produce relevant documents in a timely manner. The outcome of these investigations will have significant implications for the crypto lending and trading industry as a whole. Genesis’s lawsuit against Digital Currency Group further complicates its situation, highlighting the challenges faced by companies in this sector. As the legal battle unfolds, the future of Genesis remains uncertain.
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