Genesis Sues DCG and Barry Silbert to Recover $3.3B, Alleges Fraud and Insider Misconduct

Bankrupt crypto lender Genesis Global has filed two explosive lawsuits against its parent company Digital Currency Group (DCG) and CEO Barry Silbert, alleging a sweeping pattern of fraud, reckless mismanagement, and insider enrichment that siphoned more than $3.3 billion from the company and its creditors.

Unsealed on May 19 in the Delaware Court of Chancery, the first complaint accuses DCG of treating Genesis like a "corporate ATM", draining over $2.1 billion in crypto assets through sham transactions, insider loans, and concealed transfers — all while publicly misrepresenting Genesis’s financial health.

Filed by a court-appointed Litigation Oversight Committee (LOC) on behalf of Genesis’s creditors, the suit claims DCG and insiders including Silbert used Genesis funds to prop up Grayscale Investments, DCG’s flagship asset manager, even as Genesis spiraled toward insolvency.

As of February 9, 2025, Genesis creditors are still owed an estimated:

• 19,086 BTC

• 69,197 ETH

• 17.1 million additional tokens

• Unpaid fees and interest, totaling approximately $2.2 billion in digital assets.

Key Allegations

The lawsuits outline a series of alleged deceptive practices:

• DCG withdrew $1.2 billion from Genesis in the year before its bankruptcy.

• Genesis was forced to accept illiquid GBTC shares (Grayscale Bitcoin Trust) as collateral and barred from selling them — even after lockup periods expired.

• DCG insiders orchestrated sham end-of-quarter transactions in 2022 to falsely signal financial support and liquidity.

• Genesis operated without a board or independent governance, leaving key financial decisions in the hands of DCG executives.

The LOC alleges these withdrawals were strategically timed around major market crashes, including the collapses of Terra-Luna, Three Arrows Capital, and FTX — periods when Genesis was already insolvent. Insiders allegedly recovered 100% of their funds, while institutional and retail creditors were left exposed.

Source: GenesisLOC

The second complaint, filed in the U.S. Bankruptcy Court for the Southern District of New York, seeks to claw back the $1.2 billion in alleged preferential transfers made by DCG and its affiliates in the months leading up to Genesis's bankruptcy.

Legal Fallout Continues

These lawsuits follow a New York judge's April 2025 decision allowing most of the New York Attorney General's civil fraud case against DCG, Silbert, and former Genesis CEO Michael Moro to proceed. That case accuses the defendants of misleading investors by hiding a $1 billion balance sheet hole with a 10-year promissory note after the collapse of Three Arrows Capital.

While Genesis and crypto exchange Gemini have reached a settlement, DCG and its leadership continue to deny wrongdoing and are fighting multiple fraud-related allegations.

Genesis filed for Chapter 11 bankruptcy in early 2023, with more than $14 billion in outstanding loans, marking one of the largest collapses in the crypto lending space.

If successful, Genesis’s dual lawsuits could bring back billions to repay defrauded creditors and set a precedent for future accountability in the crypto finance sector.