Genesis Given 5-Day Deadline to Respond to Terra Subpoena

Police & Regulations
Oct 19, 2023 at 09:12 am

Genesis, a crypto lending and trading entity, finds itself under the scrutiny of a New York court. A recent court order mandates Genesis to promptly comply with a subpoena within the tight timeframe of five days. This imperative directive stems from Genesis' failure to meet a prior deadline on October 9th concerning the collapse of the terraUSD stablecoin back in 2022.

The collapse of terraUSD, a cryptocurrency supposedly tethered to the value of the U.S. dollar, reverberated across the cryptocurrency markets, prompting a response from the Securities and Exchange Commission. The regulatory body filed a lawsuit against Terraform Labs, the company behind the token, and its co-founder Do Kwon, alleging that they disseminated misleading information to investors.

Judge Jed Rakoff, in a court order issued last Friday, voiced his discontent with Genesis's lack of responsiveness. He stated:

 "As of today, the Genesis Entities have failed to produce any documents in response to the subpoenas." 

These subpoenas were dispatched by the defendants to Genesis Global Capital, Genesis Global Holdco, and Genesis Global Trading on September 12th, seeking specific information. Unfortunately, the court order does not elucidate on the nature of this requested information. 

Genesis extended substantial loans to the now-defunct hedge fund Three Arrows Capital, which found itself heavily exposed to the stablecoin. This exposure eventually led to the filing of bankruptcy by three Genesis entities in January 2023. Additionally, the trading arm ceased operations in the U.S. spot market business in September.

Judge Rakoff is confronted with the challenge of procuring pertinent information from Do Kwon in connection with the case. Kwon's legal representation argues that his inability to travel to the U.S. is due to a jail sentence he is serving in Montenegro for possession of a counterfeit passport. However, Rakoff contended in a September order that the laws of physics do not render it an insurmountable obstacle for Kwon to be deposed. He cautioned that Kwon would not be permitted to make any declarations in the case without first being available for cross-examination.

As of now, a spokesperson for Genesis has not provided an immediate response to requests for comment.

Read more: OSL, Hong Kong Crypto Exchange Owner, Considers Sale at $128 Million Valuation: Bloomberg Report

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