Shocking Lawsuits: Genesis Files $3.3B Claim Against DCG, Barry Silbert

The cryptocurrency world is buzzing with major legal action. Bankrupt crypto lender Genesis has filed two significant lawsuits targeting its parent company, Digital Currency Group (DCG), and its CEO, Barry Silbert. Genesis is seeking to claw back over $3.3 billion, alleging widespread fraud, insider enrichment, and reckless mismanagement that ultimately led to its downfall. This Genesis lawsuit brings serious accusations into the spotlight.

What Triggered the Genesis Lawsuit Against DCG and Silbert?

The core of the allegations revolves around DCG’s alleged treatment of Genesis as a personal ‘corporate ATM’. According to a complaint unsealed in the Delaware Court of Chancery, DCG and its affiliates are accused of siphoning off more than a billion dollars through self-serving loans and concealed transfers. The lawsuit claims this happened while DCG presented a misleading picture of Genesis’s financial health.

The Litigation Oversight Committee (LOC), representing Genesis creditors, asserts that over one million digital coins, valued at approximately $2.1 billion, were improperly transferred away. This occurred even as Genesis was nearing crypto bankruptcy. As of February 9, 2025, Genesis creditors are reportedly still owed around $2.2 billion in crypto assets, including significant amounts of Bitcoin and Ether, plus fees and interest.

A central accusation is that Barry Silbert and other insiders disregarded fundamental risk controls. They allegedly pushed Genesis into lending practices that primarily benefited DCG’s other holdings, particularly Grayscale Investments. This suggests a pattern where the interests of the parent company took precedence over the stability of the lending arm.

How Did Digital Currency Group Allegedly Drain Genesis?

The complaint paints a picture of Genesis operating without proper independent oversight, with key decisions allegedly made to enrich DCG at the expense of depositors and lenders. Specific instances highlighted include:

• **Sham Transactions:** Accusations of orchestrated transactions at the end of Q2 and Q3 2022 designed to deceive Genesis lenders into believing DCG was injecting liquidity and equity.
• **Illiquid Collateral:** Genesis was allegedly forced to accept illiquid Grayscale Bitcoin Trust (GBTC) shares as collateral. The complaint states Genesis was barred from selling these shares, even after the SEC-imposed lockup period ended, creating significant valuation risks.
• **Timed Withdrawals:** A second lawsuit filed in the US Bankruptcy Court alleges DCG and affiliates withdrew over $1.2 billion in USD and crypto in the year leading up to Genesis’s crypto bankruptcy. These withdrawals reportedly coincided with major market crashes like those involving Terra-Luna, Three Arrows Capital, and FTX, periods when Genesis was already under severe stress.

The lawsuits name several defendants besides DCG and Barry Silbert, including former Genesis CEO Michael Moro, former DCG CFO Michael Kraines, DCG President Mark Murphy, and DCG’s investment banker Ducera Partners. Internal documents cited in the complaints allegedly show that insiders managed to recover 100% of their funds before the bankruptcy, leaving retail and institutional creditors exposed.

What is Genesis Seeking to Recover?

Through these two separate actions, the Genesis lawsuit aims to recover a total of more than $3.3 billion. This figure represents the alleged value siphoned off or still owed to creditors due to the alleged fraudulent activities and mismanagement by Digital Currency Group and its leadership.

This isn’t the only legal challenge facing DCG and Barry Silbert. In April 2025, a New York judge allowed most of the New York Attorney General’s civil fraud lawsuit against DCG, Silbert, and Michael Moro to proceed. That suit alleges they misled investors after the Three Arrows Capital collapse, reportedly masking a $1 billion shortfall with a long-term, low-interest promissory note. While Genesis and Gemini reached a settlement in their separate dispute, DCG and the executives have continued to fight the charges, arguing that they did not sell securities.

Conclusion: The Impact of the Genesis Lawsuit

The Genesis lawsuit against Digital Currency Group and Barry Silbert represents a significant legal battle emerging from the fallout of the 2022-2023 crypto market downturns. The allegations of fraud, insider dealings, and using a lending platform as a personal fund source highlight serious governance concerns within large crypto conglomerates. As Genesis navigates its crypto bankruptcy, the outcome of these lawsuits will be critical in determining the recovery prospects for creditors and could set important precedents for accountability in the digital asset space. The legal proceedings are ongoing and watched closely by the industry.