Judge orders Genesis to respond in five days to subpoena in Terraform case

A New York district judge ordered crypto lender Genesis to comply with a subpoena after he said the firm failed to share certain documents in a case involving the dramatic collapse of algorithmic stablecoin TerraUSD. 

Genesis has five days to respond after failing to produce those documents on Oct. 9, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York said in an order from Oct. 13. 

"The Court grants the Defendants' motion to enforce the Subpoenas and orders the Genesis Entities to produce, within five(5) days of this Order being served on the Genesis Entities, all documents that are responsive to the Subpoenas," the order stated.

Genesis collapse

Certain Genesis entities filed for bankruptcy protection in January after taking a financial hit following the collapses of the crypto hedge fund Three Arrows Capital and crypto exchange FTX. 

It is not clear what information would be subject to the court order. The case is centered around the Securities and Exchange Commission's lawsuit against Terraform Labs and founder Do Kwon. The SEC charged Terra and Kwon in February with defrauding investors and said they failed to give them full and truthful disclosures about its algorithmic stablecoin, which led to disastrous losses for investors.

Algorithmic stablecoins, like Terra USD, use market incentives via algorithms to maintain a stable price. Terra was linked to Luna, a governance token, to keep the prices stable. Terra USD crashed in May 2022, wiping out billions.  

Digital Currency Group, the parent company of Genesis, did not respond to a request for comment.