In brief
- Genesis has filed two lawsuits accusing DCG and key executives of orchestrating fraudulent transfers and misleading creditors as it neared collapse.
- The complaints accuse DCG of using Genesis as a corporate "alter ego" to enrich affiliates and conceal mounting losses from creditors.
- The lawsuits seek over $3.1B, including a $1.1B promissory note and more than $1.2B in allegedly improper transfers, some of which were made in crypto assets valued at up to $2.1B.
Genesis Global has filed two new lawsuits against its parent company, Digital Currency Group, aiming to recover billions of dollars it alleges were improperly transferred as the lender’s financial condition deteriorated in 2022.
The new filings, publicly released Monday, allege DCG, CEO Barry Silbert, and affiliated executives orchestrated fraudulent transfers and misleading disclosures.
A Delaware Chancery Court complaint alleges that Genesis was "recklessly operated, exploited, and then bankrupted" by its parent company, following "a spectacular campaign of fraud and self-dealing."
Silbert allegedly "stepped in to conceal the crisis at Genesis from its lenders," while being "acutely aware" of risks embedded in Genesis' loan book, and its "vulnerability to Gemini and Bitvavo," the lawsuits allege.
Grayscale Investments allegedly benefited from the misconduct, though it is not named as a defendant.
Should the court rule in favor of Genesis, the case could serve as precedent that would "strengthen creditor rights, expand liability for parent companies in digital finance as it pertains to 'piercing the corporate veil,' and establish new standards for transparency and accountability in the crypto industry," Andrew Rossow, cyber and public affairs attorney and founder of Rossow Law, told Decrypt.
Genesis is seeking over $3.1 billion, including a $1.1 billion promissory note and more than $1.2 billion in disputed transfers, some of which were made in crypto now valued at over $2 billion.
"These baseless lawsuits recycle the same tired, two-year-old claims in an opportunistic attempt by sophisticated investors to extract additional value from DCG," a company spokesperson told Decrypt. "We worked in good faith with a wide range of stakeholders to try to achieve a comprehensive resolution of the DCG-related aspects of the Genesis bankruptcy. We will vigorously defend ourselves against these spurious claims.”
Genesis Hits Parent Company DCG With $600 Million Lawsuits
Collapsed crypto company Genesis Global on Wednesday filed two lawsuits against Digital Currency Group (DCG) and Digital Currency Group International (DCGI) demanding the repayment of over $600 million in loans—including over $115 million in Bitcoin. DCG is the parent company of Genesis, a lender that halted withdrawals in November following the crash of crypto exchange FTX. In Wednesday’s legal actions, filed in the United States bankruptcy court of the Southern District of New York, Genesis...
Promises and losses
Central to the Delaware filing is DCG's issuance of a 10-year, $1.1 billion promissory note in 2022, meant to cover Genesis's losses from Three Arrows Capital's default.
The note had a 1% interest rate and allegedly failed to provide real liquidity.
The lawsuits are backed by the Genesis Litigation Oversight Committee (LOC), appointed by the bankruptcy court to represent creditors' interests.
The committee claims the defendants spread misleading information and false financial reports to prevent a bank run and profit from the failing lender before its collapse.
The first signs of a bank run "appeared on May 7, 2022," the Delaware complaint reads.
"Within three days, LUNA's price per coin dropped from $80 to almost zero," with the tokens involved (TerraUSD and LUNA) becoming "essentially worthless" and erasing $45 billion in value at the time.
Digital Currency Group Agrees to Settle SEC Charges for $38 Million
Digital Currency Group will pay $38 million to settle SEC charges filed over the crypto firm's bankrupt Genesis Global Capital lending unit. The securities regulator had accused the company of negligence and misleading investors over the health of the failed division. DCG today settled those charges while neither admitting nor denying the allegations. "In mid-June 2022, a large borrower defaulted on a margin call, which compromised GGC’s business," Friday's SEC filing reads. "Yet, Digital Curren...
Transfers and recovery
Genesis filed a separate federal bankruptcy complaint in New York, detailing over $1.2 billion in allegedly preferential transfers to DCG and insiders before its Chapter 11 filing in January 2023.
Those transfers included $448 million to DCG, $136 million to DCG International, and $101 million to HQ Enhanced Yield Fund, among others.
Genesis also claims that $34 million in tax payments to DCG were fraudulent and is seeking in-kind recovery of over 19,000 BTC, 69,000 ETH, and 17 million tokens across other digital assets.
By May 2024, Genesis had reached a proposed $2 billion settlement with DCG, though litigation remains ongoing.
In January 2025, DCG and former Genesis CEO Michael Moro agreed to pay $38 million to settle SEC charges that they misled investors about Genesis's exposure to the collapse of Three Arrows Capital.
Neither DCG nor its executives admitted or denied the SEC’s allegations as part of the settlement.
"It's almost comically tragic: billions of dollars swirling between so-called 'industry leaders' who are supposed to set the standard, yet we're still debating the basics of fiscal responsibility and fiduciary duty," Rossow said.
Edited by Sebastian Sinclair
Editor's note: This story was updated to add comments from DCG's spokesperson.
