Genesis, the bankrupt crypto lender, has filed two lawsuits against its parent company, Digital Currency Group (DCG), and DCG CEO Barry Silbert. The allegations? Fraud, reckless mismanagement, and siphoning off more than $1 billion in value, much of it, according to the lawsuits, at the expense of Genesis creditors.
On May 19, court documents unsealed by the Delaware Court of Chancery revealed explosive claims that DCG treated Genesis like a corporate ATM. The filings accuse DCG of draining funds via insider loans and concealed transactions, all while projecting a misleading picture of financial stability.
According to the claims, approximately $2.1 billion in digital assets, including more than a million tokens, were distributed while Genesis teetered on the verge of failure. As per the complaint, Genesis Creditors are reportedly still owed $2.2 billion, comprising 19,086 Bitcoin (BTC), 69,197 Ether (ETH), and over 17.1 million other tokens, along with significant fees and interest, as of February 9, 2025.
The core of the complaint centers on the alleged role of Silbert and other insiders in ignoring basic risk management. Their actions, the lawsuits claim, pushed Genesis into reckless lending moves that ultimately benefited DCG’s prized asset, Grayscale Investments.
One especially troubling allegation: DCG is said to have pulled $1.2 billion from Genesis before it declared bankruptcy. The lender reportedly operated without a board or independent oversight, and key decisions were made to serve DCG’s interests, not those of its depositors.
The lawsuits also detail how Silbert, along with Michael Kraines and Mark Murphy, orchestrated “sham” transactions at the end of Q2 and Q3 in 2022. These deals, the complaint claims, were designed to give creditors the false impression that DCG was supporting Genesis with fresh equity and liquidity.
Genesis claims that it was compelled to take illiquid Grayscale Bitcoin Trust (GBTC) shares as collateral, which it was not even permitted to sell, even after the SEC-imposed lockups ended.
