Genesis has launched a pair of lawsuits against its parent company, Digital Currency Group (DCG), and its CEO, Barry Silbert, accusing them of fraud, reckless mismanagement and siphoning more than a billion dollars in value from the now-bankrupt crypto lender.
On May 19, the Delaware Court of Chancery unsealed a complaint detailing how DCG allegedly used Genesis as a corporate ATM, draining funds through self-serving loans and concealed transfers while presenting a false image of financial health.
Through their court-appointed Litigation Oversight Committee (LOC), Genesis creditors claim that over a million digital coins — worth about $2.1 billion — were funneled away, even as Genesis edged toward collapse.
As per the complaint, Genesis creditors are still owed around $2.2 billion worth of crypto assets, including 19,086 Bitcoin (BTC), 69,197 Ether (ETH) and over 17.1 million other tokens, along with significant unpaid fees and interest as of Feb. 9, 2025.
At the core of the lawsuit is the claim that Silbert and other insiders ignored basic risk controls and pushed Genesis into reckless lending practices that ultimately served to benefit DCG’s crown jewel, Grayscale Investments.
DCG withdrew $1.2 billion from Genesis before bankruptcy
The complaint describes Genesis as having operated without a board or independent oversight, with key decisions made to enrich DCG at the expense of depositors.
“In particular, Silbert, Kraines, and Murphy orchestrated sham transactions at the end of the second and third quarters of 2022, when Genesis’s books closed, to deceive Genesis lenders into believing that DCG was providing liquidity and equity to Genesis,” the complaint states.
Genesis also said it was forced to accept illiquid Grayscale Bitcoin Trust (GBTC) shares as collateral and was barred from selling them, creating major valuation risks.
“GBTC was illiquid because it could not be sold for six months after its purchase due to a lockup period imposed by the SEC, and DCG prohibited Genesis from reselling GBTC even after the lockup period ended,” the complaint states.
The complaint names DCG, Barry Silbert, former Genesis CEO Michael Moro, former DCG chief financial officer Michael Kraines, DCG President Mark Murphy and DCG’s investment banker Ducera Partners as defendants.
Related: Bankrupt crypto firm Genesis completes restructuring
A second complaint, filed in the US Bankruptcy Court for the Southern District of New York, alleges that DCG and its affiliates withdrew over $1.2 billion in US dollars and cryptocurrencies during the year leading up to Genesis’s bankruptcy.
These withdrawals, the LOC argued, were timed around major market events such as the collapses of Terra-Luna, Three Arrows Capital, and FTX — moments when Genesis was already insolvent.
Internal filings suggest insiders recovered 100% of their funds, while retail and institutional creditors were left exposed.
Genesis seeks to recover billions
In total, Genesis is seeking to recover more than $3.3 billion through the two lawsuits.
In April 2025, a New York judge ruled that most of the New York Attorney General’s civil fraud lawsuit against DCG, Silbert, and former Genesis CEO Michael Moro can move forward.
The suit accuses DCG and its bankrupt lending arm Genesis of misleading investors after the collapse of crypto hedge fund Three Arrows Capital, allegedly masking a $1 billion shortfall with a 10-year, low-interest promissory note.
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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