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Editor’s note: the story has been updated with a comment from DCG.
Genesis's Litigation Oversight Committee (LOC) has filed two lawsuits against Digital Currency Group (DCG), its CEO Barry Silbert, and a group of insiders, alleging systematic fraud, breach of fiduciary duty and insider enrichment that caused over $1 billion in losses to Genesis creditors.
In a complaint filed in the Delaware Chancery Court, the LOC claims that Silbert operated Genesis as a financing arm for DCG, engaging in off-market loans and draining assets for the benefit of Grayscale and other DCG affiliates.
The lawsuit seeks to recover over 1 million crypto coins valued at roughly $2.1 billion as of February 2025.
DCG responded to the allegations, saying, the “baseless lawsuits recycle the same tired, two-year old claims in an opportunistic attempt by sophisticated investors to extract additional value from DCG.”
The company worked “in good faith with a wide range of stakeholders to try to achieve a comprehensive resolution of the DCG-related aspects of the Genesis bankruptcy” and will vigorously defend itself against the claims.
"Silbert used Genesis to enrich himself and finance his broader cryptocurrency empire on off-market, unfair terms," the complaint states.
It further claims Genesis had no independent governance and was exploited to execute risky trades that ultimately left the firm insolvent by the end of 2021.
A second complaint, filed in the U.S. Bankruptcy Court for the Southern District of New York on May 19, seeks recovery of over $1.2 billion in transfers to DCG and insiders made while Genesis was insolvent.
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These transfers reportedly occurred during key crypto market crashes, including those involving Terra-Luna (CRYPTO: LUNC), 3AC, and FTX.
"Insider Defendants recovered no less than $407 million in value in just six critical weeks," the filing alleges, stating that while public statements projected solvency and strong liquidity, insiders pulled funds from the platform and exited ahead of other creditors.
Genesis creditors are said to be owed more than one million coins, and the LOC is pursuing in-kind recovery to prevent insiders from benefiting from appreciation in asset prices post-bankruptcy.
Philippe Selendy of Selendy Gay PLLC, representing the LOC, said: "The comprehensive factual allegations show a pattern of self-dealing, fraud, and mismanagement that deprived creditors of billions in value."
"Without in-kind recovery, wrongdoers—not creditors—may benefit from asset appreciation since 2022," Jennifer Selendy added.
The LOC has stated it will challenge all redactions requested by defendants in the Delaware complaint and has committed to pursuing accountability and full restitution for Genesis's retail and institutional creditors.
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