Source: Cointelegraph
Original: “Genesis Files Dual Lawsuits to Recover $3.3 Billion from Digital Currency Group (DCG) and Its CEO”
Genesis has filed a pair of lawsuits against its parent company, Digital Currency Group (DCG), and its CEO Barry Silbert, accusing them of fraud, reckless management, and extracting over $1 billion in value from the now-bankrupt crypto lending institution.
On May 19, 2025, the Delaware Chancery Court publicly released a complaint detailing how DCG treated Genesis as a corporate ATM, extracting funds through self-serving loans and concealing transfers while presenting a false image of financial health.
Through its court-appointed Litigation Oversight Committee (LOC), Genesis creditors claim that over 1 million digital currencies valued at approximately $2.1 billion were transferred out even as Genesis was on the brink of collapse.
According to the complaint, as of February 9, 2025, Genesis creditors were still owed approximately $2.2 billion in crypto assets, including 19,086 Bitcoin (BTC), 69,197 Ethereum (ETH), and over 17.1 million other tokens, along with a significant amount of unpaid fees and interest.
At the heart of the lawsuit is the allegation that Barry Silbert and other insiders ignored basic risk controls, pushing Genesis into reckless lending practices that ultimately benefited DCG's flagship company, Grayscale Investments.
The complaint describes Genesis operating without a board or independent oversight, with key decisions made to enrich DCG at the expense of depositors.
“In particular, Silbert, Kraines, and Murphy orchestrated false transactions at the end of the second and third quarters of 2022, when Genesis' books were closed, deceiving Genesis lenders into believing that DCG was providing liquidity and equity to Genesis,” the complaint states.
Genesis also claims it was forced to accept illiquid Grayscale Bitcoin Trust (GBTC) shares as collateral and was prohibited from selling these shares, resulting in significant valuation risks.
“GBTC is illiquid because, according to the lock-up period set by the U.S. Securities and Exchange Commission (SEC), it cannot be sold within six months of purchase, and DCG even prohibited Genesis from reselling GBTC after the lock-up period ended,” the complaint states.
The lawsuit names DCG, Barry Silbert, former Genesis CEO Michael Moro, former DCG CFO Michael Kraines, DCG President Mark Murphy, and DCG's investment bank Ducera Partners as defendants.
Another complaint filed in the U.S. Bankruptcy Court for the Southern District of New York claims that DCG and its affiliates withdrew over $1.2 billion in dollars and cryptocurrencies in the year leading up to Genesis' bankruptcy.
The LOC argues that these withdrawals occurred during significant market events such as Terra-Luna, Three Arrows Capital, and FTX, at a time when Genesis was already insolvent.
Internal documents show that insiders recovered 100% of their funds while retail and institutional creditors were left exposed to risk.
Genesis is seeking to recover over $3.3 billion through these two independent lawsuits.
In April 2025, a New York judge ruled that the civil fraud lawsuit brought by the New York Attorney General against DCG, Barry Silbert, and former Genesis CEO Michael Moro could largely proceed.
The lawsuit accuses DCG and its bankrupt lending division Genesis of misleading investors following the collapse of the crypto hedge fund Three Arrows Capital, allegedly using a 10-year low-interest promissory note to cover a $1 billion shortfall.
While Gemini and Genesis have reached a settlement, DCG and its executives have consistently denied the allegations, arguing that they did not sell securities.
Genesis filed for bankruptcy in early 2023, with $14 billion in outstanding loans.
Related: SEC's Crenshaw says institutions are playing a game of "regulatory whack-a-mole" with the cryptocurrency industry.
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