Genesis, a cryptocurrency lender, and its subsidiaries have filed two lawsuits against their parent company, Digital Currency Group (DCG), DCG's CEO Barry Silbert, and other executives, aiming to recover billions of dollars in crypto that were allegedly transferred fraudulently. The combined lawsuits seek $3.2 billion in restitution. A Delaware court filing seeks $2.2 billion, while a New York court filing seeks over $1 billion. According to the New York lawsuit, funds were withdrawn from Genesis to repay debts owed to DCG, Silbert, and other insiders in the year leading up to Genesis' Chapter 11 bankruptcy filing, despite the company's insolvency.
The lawsuit claims that these individuals, aware of Genesis' impending collapse due to their close relationship with the company, withdrew all their assets and recovered 100% of their crypto and dollar loans, all while keeping the public uninformed. Genesis halted withdrawals in November 2022 and filed for bankruptcy the following year. The Delaware lawsuit alleges that Silbert and his associates recklessly managed, exploited, and eventually bankrupted Genesis through a campaign of fraud and self-dealing. Creditors are still missing $2.2 billion worth of crypto assets, including bitcoin, ether, and other tokens.
Alongside seeking damages, Genesis is also seeking an equitable trust over any assets that the defendants improperly took or converted during their tenure. A DCG spokesperson described the lawsuits as baseless and an opportunistic attempt by investors to extract additional value from DCG, stating that they will vigorously defend against these claims.