To streamline legal proceedings and avoid conflicting decisions, venture capital firm the Digital Currency Group (DCG) and its CEO Barry Silbert have requested the consolidation of two class-action lawsuits concerning alleged losses during the crypto winter, media reports said.
The defendants argue that both cases share similar facts, legal issues, and class definitions, making consolidation necessary for judicial efficiency.
DCG and Silbert submitted a letter to United States District Judge Stefan Underhill in Connecticut, informing him that they had requested U.S. District Judge Lewis Liman to transfer the case from New York to Connecticut. The defendants stated that the motion to transfer would be fully briefed by June 13, 2023. If the transfer is approved, they intend to consolidate both actions swiftly.
However, the plaintiffs in Connecticut have contested the consolidation, asserting that it is premature to decide before the New York case receives approval for transfer. They also anticipate opposition from the New York plaintiffs, citing uncertainty surrounding the nature and scope of the claims.
The lawsuit in Connecticut alleges that Silbert orchestrated a misleading transaction to conceal a $1.1 billion implosion following liquidation proceedings initiated by Three Arrows Capital (3AC). The defendants are accused of securities fraud for allegedly making false or misleading statements.
Amid these ongoing legal battles, DCG has made the decision to close down its prime brokerage subsidiary, TradeBlock. The firm attributes this move to the current state of the broader economy and the uncertain regulatory environment surrounding cryptocurrencies in the United States. TradeBlock has commenced winding down its operations as of May 31.
DCG’s request for consolidation marks a significant development in the legal proceedings surrounding the alleged losses during the crypto winter. By combining the cases, DCG and Silbert aim to ensure consistency in decisions while expediting the resolution process. The outcome of the pending motions and the subsequent consolidation will play a crucial role in determining the path forward for all parties involved.
