CryptoEconomy

Bankrupt Crypto Lender Genesis Faces Deadline: New York Court Orders Compliance With Terra Subpoena Within 5 Days-TGN

Source: Adobe / Ascannio

After failing to respond to a prior order, embattled crypto lender Genesis has been subpoenaed by a New York court to produce documents related to the collapse of the algorithmic stablecoin TerraUSD (UST) last year.

In a court order dated October 13, Judge Jed Rakoff noted how Genesis hadn’t responded in “any manner whatsoever” to subpoenas executed by Terraform Labs on September 12, which required the trading desk to produce documents by October 9.

“The court grants the defendant’s motion to enforce the subpoenas and orders the Genesis entities to produce, within five days of this order being served on the Genesis entities, all documents that are responsive to the subpoenas,” wrote Rakoff in the order.

Genesis is one of many crypto lending/trading firms that fell shortly after FTX and Alameda Research collapsed in November 2022 due to heavy exposure to both companies.

As testimony from FTX executives this month has revealed, much of Alameda and FTX’s balance sheet troubles were exacerbated in June as crypto asset prices and rival trading firms collectively fell apart.

For their part, the fall of firms like Three Arrows Capital (3AC) and others largely stemmed back to Terra, whose death spiral wiped $44 billion from the market across both its Terra (LUNA) token and TerraUSD (UST) stablecoin.

Investigating Terra

The U.S. Securities and Exchange Commission (SEC) has since launched investigations into Terraform Labs and Do Kwon, the company and founder behind the protocol, for misleading investors. It alleges that LUNA was an unregistered security, and that Kwon faked trading volume on the blockchain, among other things.

Kwon is now in jail in Montenegro for possession of a fake U.S. passport. Judge Rakoff is attempting to extract information from Kwon despite his jail sentence, warning that he cannot make any declarations in the case without being available for cross-questioning.

As for Genesis, the company has sued its parent company, Digital Currency Group (DCG) for failure to pay back $620 million in loans. After declaring bankruptcy in January, the company was forced to slash 30% of its workforce.

In September, Genesis also announced an end to its U.S. spot market trading operations in September, though it claimed this was due to unspecified business reasons. 
 

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