Genesis Sues Parent Company Over $1 Billion Asset Misuse

Genesis Global Capital, the crypto lending firm that filed for bankruptcy in 2023, has launched two major lawsuits accusing its parent company, Digital Currency Group (DCG), and CEO Barry Silbert of fraud, reckless mismanagement, and siphoning over $1 billion in assets. Genesis alleges that despite owing creditors more than $2.2 billion, DCG exploited the company as a “corporate ATM,” engaging in sham transactions and insider deals that drained its resources.

One lawsuit, filed in Delaware, claims DCG forced Genesis to accept illiquid Grayscale Bitcoin Trust shares as collateral, increasing the company’s risk exposure while insiders profited. It accuses DCG of prioritizing its own interests and those of its subsidiaries at the expense of Genesis and its creditors, leading to massive losses for retail and institutional lenders. The second suit, filed in New York bankruptcy court, focuses on insider withdrawals totaling $1.2 billion during periods when Genesis was allegedly insolvent amid major crypto market crashes. While insiders reportedly recovered nearly all their funds, external clients have suffered substantial losses.

With over $14 billion in outstanding loans at bankruptcy, Genesis now seeks to recover $3.3 billion through these legal actions. The lawsuits not only spotlight alleged internal misconduct but could also have far-reaching consequences for DCG and the broader crypto lending industry.