Genesis Sues DCG and Barry Silbert to Recover $3.3B in Shocking Fraud Allegations!

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Genesis files dual lawsuits to claw back $3.3B from DCG, Barry Silbert

Genesis, a financial services firm, has filed two lawsuits: one against its parent company, Digital Currency Group (DCG), and another against DCG’s CEO, Barry Silbert. The allegations include fraudulent activities, irresponsible management, and the transfer of over a billion dollars in value from the now-defunct crypto lending platform to DCG and Silbert personally.

As a researcher, I recently came across an unveiled court document dated May 19th from the Delaware Court of Chancery. This complaint alleges that DCG misused Genesis as a personal ATM, funneling funds through self-benefiting loans and covert transfers while projecting a deceptive image of financial prosperity.

Creditors of Genesis, assigned a committee for litigation oversight, assert that more than a million digital coins, equating to approximately $2.1 billion in value, were allegedly diverted while Genesis was approaching financial ruin.

According to the grievance lodged, I’ve found that Genesis creditors are yet to be repaid approximately $2.2 billion in cryptocurrencies. This includes 19,086 Bitcoin (BTC), 69,197 Ether (ETH), and over 17.1 million other tokens, as well as substantial unpaid fees and interest, all as of February 9, 2025.

In the heart of this legal dispute lies my assertion that Silbert, along with other key figures, disregarded fundamental risk management protocols, instead promoting Genesis towards imprudent lending behaviors. These actions, I believe, were ultimately advantageous for DCG’s premier entity, Grayscale Investments.

DCG withdrew $1.2 billion from Genesis before bankruptcy

The grievance suggests that Genesis lacked a board or external supervision, leading to important choices being made primarily for the benefit of DCG, potentially harming the interests of depositors.

According to the claim, Silbert, Kraines, and Murphy arranged false transactions near the end of both the second and third quarters of 2022, a time when Genesis’s financial records were being finalized. The purpose was to trick Genesis’s creditors into thinking that DCG was offering liquidity and investment to Genesis, when in reality it was not.

In simpler terms, Genesis was compelled to take GBTC shares as security and was prohibited from liquidating them, leading to significant concerns about their value.

According to the claim, GBTC became illiquid since it couldn’t be sold for six months following its acquisition, thanks to an SEC-imposed lockup period. Moreover, Genesis was not allowed by DCG to resell GBTC even after the lockup period expired.

The lawsuit lists Digital Currency Group (DCG), Barry Silbert, previous Genesis CEO Michael Moro, ex-DCG CFO Michael Kraines, DCG President Mark Murphy, and Ducera Partners (DCG’s investment banker) as the parties being sued.

In another grievance, submitted at the US Bankruptcy Court for the Southern District of New York, it is claimed that Digital Currency Group (DCG) and its related entities withdrew approximately $1.2 billion in U.S. dollars and cryptocurrencies over the course of a year prior to Genesis’s bankruptcy filing.

According to the LOC, these withdrawals occurred strategically near significant market incidents like the failures of Terra-Luna, Three Arrows Capital, and FTX – times when Genesis Financial Services was already facing financial difficulties.

According to internal documents, it appears that the people within the company managed to fully recoup their investments, whereas both individual and institutional investors were potentially at risk.

Genesis seeks to recover billions

In total, Genesis is seeking to recover more than $3.3 billion through the two lawsuits.

Back in April 2025, a court judge in New York decided that the majority of a civil fraud case brought forth by the New York Attorney General against DCG, Silbert, and ex-CEO of Genesis, Michael Moro, could proceed.

The lawsuit claims that DCG (Digital Currency Group) and its bankrupt lending division Genesis deceived investors following the failure of crypto hedge fund Three Arrows Capital, by concealing a $1 billion deficit through a long-term, low-interest loan agreement.

While Gemini and Genesis have settled, DCG and the executives have fought the charges.

Genesis filed for bankruptcy in early 2023 with $14 billion in outstanding loans.

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2025-05-20 11:44