Genesis accuses parent company DCG executives of ignoring risk warnings and mismanaging finances as Genesis was heading for collapse
PANews reported on June 25 that according to Cointelegraph, according to a newly unsealed lawsuit, the bankrupt crypto lending company Genesis accused executives of its parent company Digital Currency Group (DCG) of ignoring risk warnings and suspected financial mismanagement when Genesis was heading for collapse.
Documents show that DCG Chief Financial Officer Michael Kraines warned in an internal memo that the collapse of Genesis could have a serious impact on DCG and its shareholders, and conducted a "deduction" of legal defense. However, DCG was accused of not taking timely action and even ignoring the warnings of third-party risk consultants.
In addition, Genesis' loan size surged from US$4 billion to US$12 billion, but financial controls were pointed out by auditors as having major deficiencies as early as 2020. Although a "contagion risk committee" was established to mitigate risks, the first meeting was delayed for nine months.
The lawsuit also revealed a "culture of obedience" within Genesis, where employees were required to prioritize DCG interests and were even required to spread a unified message after the collapse of Three Arrows Capital (3AC). The document also mentioned two controversial transactions, including a promissory note in June 2022 and a "circular transaction" in September, which were accused of trying to cover up the fact of insolvency.
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