Crypto lender Genesis Global has filed a sweeping lawsuit against its parent company, Digital Currency Group (DCG), and its CEO Barry Silbert, accusing them of orchestrating a series of deceptive insider transactions that allegedly drove the company into bankruptcy.
In a complaint filed in the Delaware Court of Chancery and a parallel filing in the U.S. Bankruptcy Court for the Southern District of New York, Genesis claims that DCG and Silbert “recklessly operated, exploited, and then bankrupted” the company for their own benefit. The lender is seeking to recover at least $2.2 billion in crypto assets on behalf of creditors.
Allegations of Self-Dealing and Financial Misconduct
Genesis alleges that Silbert, along with executives at DCG, misrepresented Genesis’s financial position and executed a series of self-serving transfers at a time when the firm was already facing deep insolvency. These actions, the suit claims, allowed DCG, Silbert, and affiliated entities like Grayscale Investments to avoid losses while Genesis’s financial situation worsened.
Although Grayscale is cited in the complaint, it is not named as a direct defendant.
The lawsuit details how over $1 billion in fiat and crypto was transferred fraudulently to DCG and its affiliates—including $450 million in fiat transfers, $297 million in crypto assets to DCG International, and $34 million labeled as “tax-related payments,” which Genesis now calls “bogus.”
Warnings Ignored, Risk Mismanaged
Genesis claims that DCG was made aware of its deteriorating financial position as early as November 2021, following warnings from consulting firm Oliver Wyman. However, the parent company allegedly failed to take corrective action.
By the end of 2021, Genesis was already insolvent, burdened with $14 billion in outstanding loans, according to court filings. The situation worsened in 2022 following the collapse of 3AC, the Terra-Luna crash, and the subsequent implosion of FTX, triggering widespread liquidity issues across the crypto lending sector.
Genesis ultimately filed for Chapter 11 bankruptcy in January 2023, citing more than $3.5 billion in liabilities to top creditors, including Gemini and VanEck.
SEC Enforcement and Genesis Restructuring
The U.S. Securities and Exchange Commission (SEC) has also taken enforcement action against both DCG and Genesis. The regulator charged the companies with securities violations and investor fraud, culminating in a $38 million settlement by DCG earlier this year.
Genesis finalized its restructuring plan in August 2024, with over $4 billion in assets now being returned to creditors.
As the lawsuits proceed, the outcomes could have far-reaching implications for corporate governance and accountability within the crypto sector—particularly for firms managing billions in digital assets without robust internal controls.
