Genesis sues DCG, CEO Barry Silbert, and affiliates for $3.3B, alleging fraud, insider gains, and hidden transfers in two lawsuits.
The cryptocurrency company has filed two lawsuits against its parent company, Digital Currency Group (DCG), and its CEO, Barry Silbert.
The lawsuits accuse the defendants of fraud, irresponsible mismanagement, and the theft of over one billion dollars in value from the now-bankrupt crypto lender.
A complaint was unsealed by the Delaware Court of Chancery on May 19, which alleged that DCG utilized the cryptocurrency company as a corporate ATM, depleting funds through self-serving loans and concealed transfers while presenting a false image of financial health.
The creditors contend that the Litigation Oversight Committee (LOC), which the court appointed, was responsible for transferring more than one million digital coins, which are estimated to be worth $2.1 billion, amid Genesis’ imminent collapse.
As of February 9, 2025, the cryptocurrency company creditors are still owed approximately $2.2 billion in crypto assets, including 19,086 Bitcoin, 69,197 Ether, and over 17.1 million other tokens, in addition to substantial unpaid fees and interest, according to the complaint.
The lawsuit asserts that Silbert and other insiders disregarded fundamental risk controls and was compelled to engage in irresponsible lending practices that ultimately benefited Grayscale Investments, the crown jewel of DCG.
DCG Withdrew $1.2 Billion From Genesis Prior To Its Bankruptcy
According to the complaint, Genesis was alleged to have operated without a board or independent oversight, with critical decisions being made to enrich DCG at the expense of depositors.
The complaint alleges that Silbert, Kraines, and Murphy orchestrated sham transactions after the second and third quarters of 2022, when the cryptocurrency company accounts closed, to deceive its lenders into believing that DCG was providing liquidity and equity to Genesis.
Genesis also stated that it was compelled to accept illiquid Grayscale Bitcoin Trust (GBTC) shares as collateral and was prohibited from selling them, resulting in significant valuation risks.
“GBTC was illiquid due to a lockup period imposed by the SEC, which prevented it from being sold for six months following its acquisition.
DCG also prohibited them from reselling GBTC after the lockup period had expired,” the complaint states.
DCG, Barry Silbert, former Genesis CEO Michael Moro, former DCG chief financial officer Michael Kraines, DCG President Mark Murphy, and DCG’s investment financier Ducera Partners are all defendants in the complaint.
According to a second complaint submitted to the US Bankruptcy Court for the Southern District of New York, DCG and its affiliates are accused of withdrawing more than $1.2 billion in US dollars and cryptocurrencies in the year preceding Genesis’s bankruptcy.
The Litigation Oversight Committee (LOC) contended that these withdrawals were aligned with significant market events, including the collapses of Terra-Luna, Three Arrows Capital, and FTX, when Genesis was already insolvent.
According to internal filings, insiders could reclaim their funds, while retail and institutional creditors were left vulnerable.
Genesis Endeavors To Recover Billions
The cryptocurrency company is pursuing a total recovery of over $3.3 billion through the two lawsuits.
In April 2025, a New York magistrate determined that most of the civil fraud lawsuit filed by the New York Attorney General against DCG, Silbert, and former Genesis CEO Michael Moro could proceed.
The lawsuit alleges that DCG and its bankrupt lending arm, Genesis, deceived investors following the bankruptcy of crypto hedge fund Three Arrows Capital by concealing a $1 billion deficit with a 10-year, low-interest promissory note.
Despite the fact that Gemini and Genesis have reached a settlement, DCG and the executives have contested the allegations.
Genesis filed for insolvency in early 2023 due to $14 billion in outstanding loans.
