In a proposed securities class action lawsuit against Digital Currency Group Inc., a group of lenders claimed that Barry Silbert, the CEO of an insolvent crypto firm, concocted a “misleading phony deal” to hide an impending $1 billion implosion.
Former employee reveals potential losses
According to accusations made by a former company employee, Barry Silbert apparently knew about the loss for several months but decided not to tell shareholders or regulatory authorities.
As per the claims, DCG made several poor bets in the BTC market, which led to the loss. The former employee, who requests anonymity, alleges that Barry Silbert knew about the subpar performance of these investments but persisted in making more, resulting in a significant loss.
DCG responded to the allegations with a statement denying all wrongdoing and asserted that market volatility, not the CEO or the company’s poor management, was to blame for the loss. According to the statement, the business has been open with its investors and has disclosed all pertinent facts.
The news impacts the outlook of crypto firms
DCG and Genesis’ creditors have expressed their displeasure with how the two have handled the poor capital management issue. A Twitter user shared a photo of an ex-employee who was blamed for sharing the yet-to-be-implemented promises that DCG gave.
The Securities and Exchange Commission said it would look into the allegations. If the accusations are confirmed, the CEO and the business may be subject to heavy fines, penalties, and possibly criminal charges.
Due to the scenario, there have been calls for further regulation of the industry, highlighting worries about the lack of accountability and transparency in the crypto market. More details about the tale are anticipated to be revealed in the upcoming days as it continues to develop.