tl;dr
Genesis Global has filed two lawsuits against its parent company, Digital Currency Group (DCG), alleging fraudulent transfers and misleading disclosures as Genesis's financial condition worsened in 2022. The complaints accuse DCG, CEO Barry Silbert, and executives of reckless operation and self-deal...
Genesis Global has initiated two lawsuits against its parent company, Digital Currency Group (DCG), accusing it and CEO Barry Silbert of fraudulent transfers, misleading disclosures, and mismanagement that led to billions in losses as Genesis's financial health deteriorated in 2022.
The complaints center on a $1.1 billion promissory note issued by DCG in 2022, which allegedly offered no real liquidity to cover losses linked to Three Arrows Capital's collapse. The lawsuits claim DCG engaged in self-dealing, concealed Genesis’s financial crisis, and disseminated false information to prevent a bank run while profiting from the lender's decline.
A Delaware Chancery Court complaint describes Genesis as “recklessly operated, exploited, and then bankrupted” by DCG, accusing Silbert of actively hiding risks associated with Genesis's loans, including vulnerabilities involving Gemini and Bitvavo. Although Grayscale Investments reportedly benefited from the misconduct, it is not named in the lawsuits.
The Genesis Litigation Oversight Committee (LOC), appointed by the bankruptcy court to protect creditor interests, supports the claims that defendants spread misleading financial reports to forestall a bank run that first appeared in May 2022 following steep drops in TerraUSD and LUNA tokens, which erased $45 billion of value.
Separate bankruptcy filings reveal over $1.2 billion in preferential transfers to DCG and insiders during the lead-up to Genesis’s Chapter 11 filing, including $448 million to DCG, $136 million to DCG International, and $101 million to the HQ Enhanced Yield Fund. Genesis is also pursuing recovery of tens of thousands of Bitcoin, Ethereum, and other digital tokens totaling billions in value.
In January 2025, DCG and former Genesis CEO Michael Moro settled SEC charges for $38 million, accused of misleading investors about Genesis’s exposure after Three Arrows Capital’s collapse. Neither party admitted wrongdoing, however. Despite a proposed $2 billion settlement reached by May 2024, litigation continues.
This high-profile case could establish important legal precedents by strengthening creditor rights, expanding parent company liability in crypto finance, and setting new standards for transparency and corporate accountability in the digital asset sector. It has drawn attention to enduring challenges in fiscal responsibility within the cryptocurrency industry.