Crypto lender Genesis Global has filed lawsuits against its parent company, Digital Currency Group (DCG), seeking over $3.1 billion. The suits, filed in Delaware and New York, allege fraud, mismanagement, and improper asset transfers. The company claims DCG and CEO Barry Silbert misled creditors and siphoned off funds. The legal battle could shake up the crypto industry as it follows Genesis’s 2023 bankruptcy, linked to risky financial moves.
Genesis Goes to Court Against DCG
Genesis’s troubles began with the 2022 crypto market crash. It suffered huge losses from Three Arrows Capital’s default. DCG issued a $1.1 billion promissory note to cover the platform’s losses, but it had a low 1% interest rate and a 10-year term, offering little real help. Genesis alleges DCG made over $1.2 billion in preferential transfers to insiders before its bankruptcy. These included $448 million to DCG and $136 million to DCG International.
The crypto lender also seeks to recover 19,000 Bitcoin, 69,000 Ethereum, and other crypto assets. It filed a Delaware suit for $2.1 billion in crypto and a New York bankruptcy case for $1.2 billion in transfers.
The suits accuse DCG of fraud and manipulating financial disclosures. Genesis’s bankruptcy followed exposure to collapsed firms like FTX. A 2023 SEC settlement saw DCG and former Genesis CEO Michael Moro pay $38 million for misleading investors. These events fueled the company’s push to recover funds.
Is DCG Preparing for the Case?
DCG has not yet issued a detailed public response to the lawsuits. A spokesperson previously said DCG acts with integrity, denying similar allegations.
In past disputes, DCG argued that the crypto lender’s bankruptcy plan unfairly favored creditors over its equity stake. It claimed crypto repayments should be capped at 2023 values when Bitcoin was $21,000, not $67,000. The court rejected this, prioritizing creditors’ claims. DCG’s silence on the new lawsuits suggests it is preparing a legal defense.
This high-stakes legal fight could set new rules for crypto accountability. If Genesis wins, it may strengthen creditor rights and parent company liability. The case highlights the risks in crypto lending and transparency issues. It could delay approvals for crypto financial products, like Bitcoin ETFs, tied to DCG’s subsidiary Grayscale.
