Crypto Journalist

Anas Hassan

Crypto Journalist

Anas Hassan

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Anas is a crypto native journalist and SEO writer with over five years of writing experience covering blockchain, crypto, DeFi, and emerging tech.

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Last updated: 

August 16, 2025

Digital Currency Group (DCG) has escalated its legal battle with bankrupt subsidiary Genesis Global Capital, filing a countersuit demanding $1.1 billion in promissory note relief and $105 million in alleged overpayments.

The move comes as Genesis pursues over $3.1 billion in damages against its parent company through multiple ongoing lawsuits.

Three Arrows Capital Collapse Sparks Corporate War

The conflict traces back to June 2022, when Three Arrows Capital defaulted on $2.36 billion in loans from Genesis.

DCG voluntarily issued a $1.1 billion promissory note to backstop potential losses from the hedge fund’s collapse.

The note contained automatic reduction provisions tied to any recoveries from Three Arrows Capital’s assets.

Genesis subsequently recovered nearly $2.8 billion from Three Arrows Capital, primarily through GBTC shares that surged from $428.5 million to over $2.1 billion by May 2024.

DCG claims these recoveries automatically reduced the promissory note’s principal to zero under the original agreement terms.

Despite the alleged principal reduction, DCG continued making payments totaling $106 million to Genesis under what it calls a “misapprehension” about the note’s remaining balance.

The parent company now seeks recovery of these funds plus interest through four legal counts, including declaratory judgment and unjust enrichment.

The legal warfare intensified following Genesis’s bankruptcy filing in January 2023 after accumulating $3.5 billion in debts.

Previously unsealed court documents reveal DCG executives feared Genesis could be treated as their “alter ego” as early as 2022, with CFO Michael Kraines warning about potential corporate veil piercing scenarios.

Genesis has mounted its own offensive, pursuing $2.2 billion in crypto assets through Delaware courts and over $1 billion in allegedly fraudulent transfers through the New York bankruptcy court.

The subsidiary claims DCG extracted $450 million in crypto assets and $297 million through international transfers while Genesis faced liquidity stress.

The Securities and Exchange Commission joined the fray in January 2025, fining DCG $38 million for securities violations and former Genesis CEO Michael Moro $500,000 for misleading investors about the company’s financial health following Three Arrows Capital’s collapse.

The regulatory action revealed DCG executives knew about over $1 billion in Genesis losses while portraying financial stability.

Corporate Control and Financial Engineering Allegations

Internal documents released by Genesis’s Litigation Oversight Committee paint DCG as treating its subsidiary like a “de facto treasury” while extracting value through insider loans and risky trades.

Genesis employees described a “culture of submission” where they served DCG’s interests over their own operational integrity.

DCG’s risk committee delayed its first meeting for nine months after formation, with Kraines later joking that the delay made his “future deposition easier.”

External auditors flagged “material weaknesses” at Genesis as early as 2020, yet the parent company allegedly continued extracting funds.

The committee alleges DCG orchestrated fraudulent transactions, including the June 2022 promissory note and a September round-trip deal designed to mask Genesis’s financial distress.

Genesis claims it was already insolvent by the end of 2021 despite carrying $14 billion in outstanding loans.

Consulting firm Oliver Wyman warned DCG about Genesis’s financial vulnerabilities in November 2021, but the parent company failed to implement corrective measures.

Instead, internal messages from 2022 indicate employees believed Genesis was being “propped up” so DCG could extract cash before the collapse.

Notably, Genesis has made substantial progress in returning funds to creditors despite the ongoing legal battles.

The company distributed $2.18 billion to approximately 232,000 users by May 2024, including through a pending $1.8 billion settlement with Gemini Earn participants.

DCG previously settled over $1 billion in debt, including $627 million owed to Genesis by January 2024, following a November 2023 agreement reached after Genesis sued for loan repayments.

The parent company had defaulted on over $620 million in debt by May 2023.

As it stands now, the multiple legal proceedings continue as both companies navigate bankruptcy restructuring, regulatory enforcement, and billions in creditor claims stemming from the 2022 crypto market collapse.

Merrill Lynch will have to shell out nearly $3.7 million in damages and other costs after arbitrators sided against the wealth management firm following a private equity complaint.

Two customers, Qun He and Haihui Zhang, filed a complaint against Merrill, Bank of America’s wealth management division, in late 2023, alleging the firm violated securities laws, industry standards and its fiduciary duty.

The complainants also alleged the firm acted with negligence and negligent supervision and breached its contract related to various unspecified securities. Merrill Lynch denied the allegations.

The U.S. Financial Industry Regulatory Authority (FINRA) made an independent arbitration forum available, and a public panel of arbitrators decided Merrill Lynch should pay the claimants $2.73 million in compensatory damages, $2,002 in costs and $954,634 in attorneys’ fees.

Michael Bixby, a Florida attorney who represented the two customers, tells AdvisorHub that a broker recommended investments in illiquid proprietary feeder funds sold by Merrill. Bixby says that the feeder funds pooled capital into private equity investments overseen by institutional investors such as Apollo Global Management, KKR and Blackstone.

The lawyer says the recommended funds were advertised as having potential annual returns of 15% to 20%, but ended up recording annual returns around 3% after subtracting private equity fees and administrative charges from Merrill.

“We’re pleased with the result, and we think it reflects the arbitrator’s decision that Merrill was responsible for misconduct and held them accountable.” 

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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Coinbase and two executives have been hit with another proposed class-action lawsuit over the crypto exchange’s stock price drop after disclosing a user data breach earlier this month and for allegedly failing to disclose a violation of an agreement with a UK regulator.

Coinbase investor Brady Nessler said in a May 22 lawsuit filed in a Pennsylvania federal court that the data breach and the alleged broken agreement with the UK’s Financial Conduct Authority (FCA) resulted in a “precipitous decline in the market value of the Company’s common shares,” causing stockholders to suffer “significant losses and damages.”

Coinbase said on May 15 that its damages bill could run up to $400 million after it was hit with a $20 million extortion attempt four days earlier, with several of its customer support agents bribed to access internal systems and steal a limited amount of user account data.

Nessler claimed Coinbase (COIN) shares dropped by 7.2% to close at $244 on May 15 as a result of the disclosure. However, the stock did stage a comeback, spiking 9% and hitting $266 by the closing bell on May 16, according to Google Finance. 

Coinbase stock closed down over 3% on Friday, May 23 at $263, falling another $1.62 after the bell. COIN is up nearly 6% so far this year.

Nessler’s complaint is seemingly the first to argue damages caused by Coinbase’s stock drop following its breach disclosure in a series of recent class-action lawsuits over the incident.

The crypto exchange was hit with at least six lawsuits in the days after disclosing the data breach, all accusing it of mishandling the incident and failing to protect their data. 

UK agreement breach hurt stock, suit says

The FCA fined Coinbase’s UK arm $4.5 million in July 2024 for breaching a 2020 voluntary agreement preventing the exchange from onboarding customers considered high risk by the regulator.

The FCA said Coinbase onboarded 13,416 customers that the regulator considered high-risk and offered them crypto services.

Related: Coinbase presses to axe rule banning SEC staff from holding crypto

Nessler said in the suit that the fine saw Coinbase’s stock fall by over 5%, closing at $231.52 on July 25, 2024.

Nessler also claimed that Coinbase didn’t disclose it had breached this agreement when the exchange first listed its shares on the Nasdaq in April 2021, and as a result, “the market price of the Company’s securities had been artificially,” inflated. 

Nessler claims had she known about the agreement violation, she would not have purchased the stock at the “artificially inflated prices.”

Coinbase did not immediately respond to a request for comment.

The class suit was filed on behalf of anyone who bought Coinbase stock between April 14, 2021, and May 14, 2025, and is asking for damages and a jury trial. Brian Armstrong, CEO of Coinbase and chief financial officer Alesia Haas are also named as defendants.

Another lawsuit filed in Illinois on May 13, alleges Coinbase failed to notify users in writing of the collection, storage, or sharing of their biometric data and the purpose and retention schedule for their data.

Magazine: Bitcoin bears eye $69K, CZ denies WLF ‘fixer’ rumors: Hodler’s Digest, May 18 – 24

]]> https://earlybirdsinvest.com/coinbase-faces-another-data-breach-lawsuit-claiming-stock-drop-damages/feed/ 0 38328 https://earlybirdsinvest.com/wells-fargo-ordered-to-pay-832000000-in-damages-after-jury-finds-lender-mismanaged-and-charged-unauthorized-fees-on-trust-fund-for-2000-children/ https://earlybirdsinvest.com/wells-fargo-ordered-to-pay-832000000-in-damages-after-jury-finds-lender-mismanaged-and-charged-unauthorized-fees-on-trust-fund-for-2000-children/#respond Sat, 05 Apr 2025 18:37:38 +0000 https://earlybirdsinvest.com/wells-fargo-ordered-to-pay-832000000-in-damages-after-jury-finds-lender-mismanaged-and-charged-unauthorized-fees-on-trust-fund-for-2000-children/

Wells Fargo is on the hook for hundreds of millions of dollars after a jury in Florida found the bank charged unauthorized fees and mishandled a trust fund established for minors.

The law firm representing the Seminole Minors Per Capita Payment Trust, a trust fund set up by the Seminole Tribe of Florida to safeguard the financial futures of around 2,000 children, says Wells Fargo is set to pay $825 million in damages and over $7 million compensation for the unauthorized fees charged.

The lawsuit accused Wells Fargo and eight of its executives of breaching fiduciary duty to the tribe and its children. The eight Wells Fargo executives were ordered to individually pay token damages of between $50 to $500.

According to the plaintiffs’ lawyer, Wells Fargo relationship manager Kim Scott confessed to the bank’s wrongdoing during cross-examination

“…Scott admitted Wells Fargo knowingly mismanaged funds, maintained inadequate records, and collected millions in unauthorized fees. Scott also revealed he had never fully reviewed the Trust’s governing documents, despite managing one of the bank’s largest accounts.”

Wells Fargo was fired as the trust fund’s trustee in 2016 after officials of the Seminole Tribe conducted a review of the rate of returns. Wells Fargo’s investment strategy reportedly resulted in returns that barely kept pace with inflation. The leaders of the Seminole Tribe also questioned illegal fees amounting to $7.6 million that Wells Fargo had charged the trust.

Following the jury verdict, Wells Fargo says it will appeal. A spokesperson for Wells Fargo’s Wealth and Investment Management department, Meghan McDonald, says.

“We followed the [Seminole] Tribal Government’s clear and repeated instructions about the management of the trust, abided by our fiduciary duty, and delivered financial results consistent with the Trust’s mandate for the children of the Tribe during our time as Trustee. Our goal for the appeal is to address multiple courtroom rulings that we believe prevented us from sharing the full story with the jury.”

The Seminole Minors Per Capita Payment Trust was set up two decades ago with the sole trustee being Wachovia Bank, which Wells Fargo acquired in 2008. The trust derived its resources primarily from the Tribe’s gaming enterprises. Currently, estimates place the trust’s assets at nearly $3 billion.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Generated Image: Midjourney