Genesis Global Capital has initiated two lawsuits targeting its parent company, Digital Currency Group (DCG), and DCG CEO Barry Silbert, alleging fraud, reckless mismanagement, and unauthorized siphoning of assets exceeding $3.3 billion. The complaints, unsealed in Delaware and filed in New York, claim DCG operated Genesis as a 'corporate ATM,' extracting substantial funds via illicit loans and transfers while obscuring the lender's deteriorating financial state.
According to the Litigation Oversight Committee representing Genesis creditors, over a million digital assets valued at approximately $2.1 billion—including 19,086 BTC, 69,197 ETH, and 17.1 million other tokens—were illicitly redirected as Genesis neared insolvency. The complaints argue that insiders ignored risk controls, engaged in reckless lending, and manipulated financial disclosures to benefit DCG subsidiaries such as Grayscale Investments. Notably, Genesis was compelled to accept illiquid Grayscale Bitcoin Trust shares (GBTC) as collateral, which were restricted from resale, increasing valuation risk.
One suit highlights that DCG and affiliates withdrew over $1.2 billion in funds and cryptocurrencies in the year before Genesis’s January 2023 bankruptcy, often near significant market crises like Terra-Luna, Three Arrows Capital, and FTX collapses—periods when Genesis was already insolvent. Internal documents suggest insiders recovered full funds while retail and institutional creditors suffered losses. Genesis originally filed for bankruptcy with nearly $14 billion in outstanding loans, subsequently completing restructuring by August 2024 and distributing roughly $4 billion to creditors.
Both complaints seek to hold DCG accountable and maximize creditor recoveries amidst ongoing allegations of fraudulent practices. Additionally, a separate New York fraud lawsuit against DCG, Silbert, and former Genesis CEO Michael Moro is progressing. Meanwhile, Gemini and Genesis have agreed to a settlement, but DCG and its executives continue contesting securities charges.