Key Takeaways:
Genesis has initiated two lawsuits against Digital Currency Group (DCG) and CEO Barry Silbert, aiming to recoup over $3.2 billion. The complaint filed in Delaware alleges mismanagement and misrepresentation of Genesis’ financial state, while a bankruptcy suit in New York indicates over $1 billion in fraudulent transfers to DCG and its affiliates.
The crypto lending firm Genesis Global has turned to the courts to seek redress from its parent company, DCG, and its CEO Barry Silbert, whom it accuses of orchestrating a series of insider deals that pushed the firm into insolvency.
In a lawsuit submitted to the Delaware Court of Chancery, Genesis claims that Silbert and his team “recklessly operated, exploited, and then bankrupted” the company through self-serving transactions and misleading statements about its financial standing. According to an announcement made on Monday, Silbert allegedly misrepresented the financial health of Genesis to benefit himself and the entities associated with DCG, which include Grayscale Investments, though the latter is not named as a defendant.
Genesis Seeks $2.2 Billion
Genesis is pursuing the recovery of approximately $2.2 billion in digital assets such as Bitcoin and Ethereum through the Delaware lawsuit, with plans to reallocate the recovered funds to creditors still awaiting compensation.
A second legal action, presented in the U.S. Bankruptcy Court for the Southern District of New York, claims more than $1 billion in fraudulent transfers involving both fiat and cryptocurrencies.
This suit identifies eight transactions amounting to around $450 million sent to DCG, along with an excess of $297 million in digital assets dispatched to DCG International. Genesis also alleges it made an additional $34 million payment to DCG, which it now deems as unsubstantiated tax-related payments.
It’s gonna be a big week… The Genesis LOC’s two major lawsuits against DCG, Silbert, and a network of insiders are now available to the public.
The partially redacted complaint in Delaware Chancery Court alleges Silbert and DCG’s control and exploitation of Genesis, pursuing…
— GenesisLOC (@TheGenesisLOC) May 19, 2025
Details from the court filings suggest that these transfers occurred during a period of significant liquidity challenges for Genesis, triggered by the 2022 crash of the Terra-Luna project and an overall downturn in the crypto market.
However, documents also indicate that Genesis had already declared insolvency by the end of 2021, with an alarming $14 billion in outstanding loans. The New York complaint articulates that “Genesis faced extraordinary systemic risk and had virtually no internal controls to mitigate that risk.”
DCG Was Warned as Early as 2021
Further disclosures reveal that DCG received warnings regarding Genesis’s financial weaknesses as early as November 2021, courtesy of consulting firm Oliver Wyman, yet no corrective actions were taken.
The financial troubles for Genesis were set in motion by the collapse of Three Arrows Capital (3AC), which caused significant liquidity strains, further exacerbated by the downfall of FTX later that same year.
In January 2023, Genesis filed for Chapter 11 bankruptcy protection, revealing debts exceeding $3.5 billion owed to its top 50 creditors, which include prominent firms like Gemini and VanEck. After securing court approval, Genesis established a restructuring plan in August 2024 and has begun distributing over $4 billion in assets back to its creditors.
This year, the Securities and Exchange Commission (SEC) also initiated enforcement actions against DCG and Genesis, citing breaches of securities laws. The agency accused both parties of misleading investors, which led to penalties and subsequent legal repercussions. To resolve these allegations, DCG consented to pay a $38 million fine.
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