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Genesis LOC’s Two Major Lawsuits Against DCG, Barry Silbert, and a Network of Insiders Now Available to the Public

via Business Wire

Partially redacted complaint in Delaware Chancery Court alleges Silbert and DCG’s control and exploitation of Genesis, pursuing in-kind recovery for creditors. Genesis creditors are owed over 1 million coins valued at approximately $2.1 billion U.S. Dollars, as of February 9, 2025

New complaint in the U.S. Bankruptcy Court for the Southern District of New York seeks over $1.2 billion in cryptocurrency and U.S. Dollars transferred to insiders while Genesis was insolvent

The Genesis Litigation Oversight Committee was formed to bring long overdue accountability to one of the most significant cases of breaches of fiduciary duty, fraud, and preferential transfers in digital asset history

The Genesis Litigation Oversight Committee (the “LOC”) filed two complaints, a critical step toward holding responsible parties accountable:

  • A complaint filed on May 13, 2025, in the Delaware Court of Chancery against Genesis’s parent company, Digital Currency Group Inc. (“DCG”), its CEO Barry Silbert, former Genesis CEO Michael Moro, DCG advisor Ducera Partners LLC (“Ducera”), and its CEO Michael Kramer.
  • A complaint filed on May 19, 2025, in the U.S. Bankruptcy Court for the Southern District of New York against DCG, Silbert, and affiliated insiders.

The Delaware Chancery Court Complaint (“Delaware Complaint”)

The partially redacted Delaware Complaint, which became public on Monday, May 19, 2025, alleges how Silbert and DCG operated an insolvent Genesis as DCG’s treasury, with DCG helping itself to loans on below-market terms.

The Delaware Complaint asserts claims of breach of fiduciary duty, fraud, and unjust enrichment against Silbert and other DCG and Genesis executives for abuse of Genesis at the expense of Genesis and its creditors. It seeks recovery in-kind, including the over 1 million coins valued at approximately $2.1 billion U.S. Dollars that Genesis creditors are owed as of February 9, 2025.

At the heart of the alleged wrongdoing was Silbert’s disregard of any prudent lending controls at Genesis, fueling massive lending operations and risky trading activities that benefitted DCG and its lucrative BTC Trust, Grayscale Investments LLC (“Grayscale”), to the detriment of Genesis and its creditors. The Delaware Complaint lays out how this misconduct by DCG, Silbert, and others breached their fiduciary duties and rendered Genesis insolvent no later than December 31, 2021.

“The Delaware Complaint reveals how the Genesis lending business fueled profits for DCG’s crown jewel, Grayscale, benefitting from Genesis’s catastrophic failure to implement the most rudimentary lending controls. DCG and Genesis are alleged to have operated as a single enterprise within Silbert’s crypto conglomerate, designed to generate profits for DCG, Silbert and insiders using cryptocurrency provided primarily by Genesis creditors,” said the Genesis Litigation Oversight Committee.

The Delaware Complaint alleges that under Silbert’s control, Genesis presented itself as a well-managed cryptocurrency bank, accepting creditor deposits of cryptocurrencies, promising to pay a fixed rate of interest in-kind on deposits, and lending to counterparties—notably the now-defunct Three Arrows Capital (“3AC”) and FTX's Alameda Research (“Alameda”). In reality, Silbert and DCG exploited an insolvent Genesis for their benefit. When Genesis’s loans to 3AC collapsed, and it faced a massive hole in its balance sheet, DCG gave Genesis a promissory note of $1.1 billion supposedly to shore up its liquidity and offset the losses—in fact that loan would not be payable for a decade and did not give Genesis the immediate liquidity it needed. Genesis then falsely touted this note to its customers, claiming that DCG had buttressed its financial position when it had not.

The Delaware Complaint further alleges that Silbert and others concealed Genesis’s insolvency, manipulated financial disclosures, and orchestrated a misleading marketing campaign—all to falsely reassure creditors regarding the strength of Genesis’s financial condition. In the meantime, Silbert and other insiders pulled their own assets out of Genesis in the run up to the bankruptcy filing. The LOC is represented by Selendy Gay PLLC.

“The Delaware Complaint alleges that Silbert and his group of insiders recklessly operated, exploited, and bankrupted Genesis,” said Philippe Selendy of Selendy Gay. “The comprehensive factual allegations show a pattern of self-dealing, fraud, and mismanagement that deprived hundreds of individual Genesis creditors and institutional lenders of billions of dollars of value in crypto and fiat assets.”

“The LOC is pursuing in-kind recovery of cryptocurrency for the benefit of Genesis creditors who entrusted their crypto assets to the company. Without this equitable remedy, Silbert and other wrongdoers—rather than the injured creditors—may benefit from the appreciation in value of those assets since 2022,” according to Jennifer Selendy of Selendy Gay. She added, “Importantly, the LOC is committed to correcting injustices on behalf of all Genesis creditors and ensuring that the full extent of this misconduct is brought to light and remedied through legal action. This litigation represents a critical step toward holding DCG, Silbert, and other insiders accountable.”

The LOC plans to challenge all redactions sought by the defendants in the Delaware Complaint.

The Bankruptcy Court Complaint (“Bankruptcy Complaint”)

In addition, on May 19, 2025, the LOC, acting on behalf of post-reorganization cryptocurrency companies Genesis Global Capital, LLC and Genesis Asia Pacific Pte. Ltd., filed a separate complaint in the U.S. Bankruptcy Court for the Southern District of New York seeking to recover more than $1.2 billion in cryptocurrency and U.S. Dollars for transfers made to DCG, Silbert, and other insiders in the year leading up to Genesis’s bankruptcy.

The Bankruptcy Complaint alleges that these transfers—often timed around market flashpoints including the collapses of Terra-Luna, 3AC, and FTX—were orchestrated while Genesis was insolvent, and insiders knew the business was on the brink of collapse. The Bankruptcy Complaint also alleges that DCG exploited Genesis by extracting over $34 million from Genesis Capital purportedly on account of obligations under a “tax sharing agreement” that did not actually exist.

For more information, or to access the partially redacted Delaware Complaint, or the full Bankruptcy Complaint, visit the Genesis LOC's official website.

Delaware Complaint Highlights

Breach of Fiduciary Duties & Control:

  • “Silbert used Genesis to enrich himself and finance his broader cryptocurrency empire on off-market, unfair terms before overseeing its demise.” (paragraph 1)
  • “At all relevant times, Silbert and DCG dominated and controlled Genesis for their own benefit.” (paragraph 1)
  • “Defendants acted to conceal Genesis’s insolvency while Silbert rushed to insulate himself, his friends, and DCG from the inevitable fallout, in disregard of the fiduciary duties they owed to Genesis for the benefit of Genesis’s residual claimants, including individual and institutional creditors.” (paragraph 5)
  • “DCG, Silbert, Kraines, and Murphy used their managerial control over Genesis to require Genesis to loan to counterparties that would engage in a speculative trade.” (paragraph 69)
  • “The GBTC Trade enriched DCG and Silbert via Grayscale and imperiled Genesis and its lenders. DCG’s prerogative was for Genesis to lend to counterparties engaged in the GBTC Trade, while Grayscale and DCG profited risk-free.” (paragraph 70)
  • “There was no risk assessment, approval process, or collateral needed: When DCG demanded liquidity, its piggy bank Genesis delivered.” (paragraph 104)

DCG’s Alter Ego:

  • “DCG’s compliant pawn, Genesis’s former ‘CEO’ Moro, unsurprisingly stood by and allowed DCG to pilfer Genesis; the Genesis employees who disagreed with Silbert or refused to do DCG’s bidding were terminated and faced Silbert’s influential wrath in the industry.” (paragraph 8)
  • “Genesis did not have a separate, independent existence from DCG. This was no secret at DCG.” (paragraph 51)

Fraudulent Accounting Cover-Ups:

  • “Silbert, Kraines, and Murphy orchestrated sham transactions at the end of the second and third quarters, when Genesis’s books closed, to deceive Genesis lenders into believing that DCG was providing liquidity and equity to Genesis.” (paragraph 277)
  • “Silbert, Kraines, and Murphy caused DCG to issue the Promissory Note to Genesis, which was designed and accounted for to conceal Genesis’s $1.1 billion unsecured exposure to 3AC.” (paragraph 277)
  • “In the wake of the 3AC collapse, through its officers and employees, DCG drafted, edited, approved, and disseminated numerous misrepresentations and omissions about Genesis’s financial state. Those misrepresentations falsely indicated that, among other things: (1) Genesis was solvent when it was not; (2) Genesis was adequately capitalized when it actually was severely undercapitalized; (3) Genesis’s balance sheet was “strong” when an accurate Genesis balance sheet would have reflected a $1.1 billion loss to 3AC; (4) the Promissory Note was a current asset worth $1.1 billion when actually the Promissory Note was illiquid and its real value was worth a tiny fraction of that amount; and (5) the Genesis weighted average loan duration was 54.3 days when, accounting for the Promissory Note, the accurate weighted average loan duration was more than 730 days or two years.” (paragraph 292)

False Marketing Campaign:

  • “These DCG-scripted falsehoods were designed to induce customers, counterparties, and lenders (including Bitvavo and those of Gemini) to keep their valuable crypto and fiat currencies on the Genesis platform and to continue depositing even more assets with Genesis.” (paragraph 12)
  • “[N]eeding to maintain the illusion that all was well, to protect DCG and his crypto empire, Silbert focused on ‘continu[ing] to perpetuate’ the idea ‘that [G]enesis [wa]s the ‘blue chip’ in this mess.’ Silbert knew that was a lie. But as he intended, Genesis’s lenders relied on the June 15 Statement, which created a false impression that things at Genesis were business as usual.” (paragraph 132)

Failure to Implement Systemic Controls & Knowledge of Wrongdoing:

  • “Genesis was severely undercapitalized, lacked reasonable risk management, and had no board of directors or independent management of its own." (paragraph 1)

Bankruptcy Complaint Highlights

  • “Plaintiffs bring this action to avoid and recover ‘in kind’ preferential and fraudulent transfers of cryptocurrency and U.S. Dollars (“USD”) now worth more than one billion dollars. These transfers were made to Genesis’s parent company, DCG, its founder and CEO, Barry Silbert, and various DCG affiliates and other insiders in the year leading up to Plaintiffs’ chapter 11 filings, all while Genesis was insolvent.” (paragraph 1)
  • “Insider Defendants typically initiated their transfers around watershed events in the cryptocurrency industry…when the Insider Defendants knew through their close relationship with Genesis that its business was on the brink of collapse.” (paragraph 1)
  • “DCG and Barry Silbert worked to fend off a run on the bank at Genesis, falsely assuring Genesis’s customers that the business was ‘strong’ and had a ‘ton of liquidity.’” (paragraph 1)
  • “While the Insider Defendants withdrew their assets and recovered 100% on USD and cryptocurrency loans from Genesis’s crippled platform, the public was kept in the dark[.]” (paragraph 1)
  • “While nothing was done to address the systemic risks at Genesis, Genesis’s liabilities continued to exceed a fair valuation of its assets, and Genesis was positioned to collapse when the volatile cryptocurrency industry had a prolonged market downturn. That is exactly what happened in 2022.” (paragraph 64)
  • “The Terra-Luna Collapse strained other crypto companies, causing a cascading effect as crypto holders pulled funds from other crypto exchanges. Genesis’s largest lenders began asking questions about the safety of their assets on the Genesis platform. These creditors were met with false assurances.” (paragraphs 70-71)
  • “Throughout the year prior to Genesis’s bankruptcy filing, DCG and Genesis falsely reassured customers that Genesis’s balance sheet was ‘strong’ and that it had a ‘ton of liquidity’ to try to stave off the inevitable run on the bank. Meanwhile, the Insider Defendants called their loans ahead of other creditors in aggregate amounts of USD and cryptocurrency worth over $1.2 billion as of March 31, 2025.” (paragraph 87)
  • “Insider Defendants recovered no less than $407 million in value in just six critical weeks: the two weeks following each of the Terra-Luna Collapse, the 3AC Collapse, and the FTX Collapse[.]” (paragraph 94)
  • “Altogether, during the [1 year before Genesis filed for bankruptcy], the Insider Defendants called USD loans totaling more than $620 million and cryptocurrency loans in excess of $216 million. […] As of March 31, 2025, that cryptocurrency is worth over $582 million, and the Preferential Transfers are worth over $1.2 billion.” (paragraph 95)

Advisors

Selendy Gay PLLC is serving as legal counsel, BRG is serving as financial advisor, and C Street Advisory Group is serving as strategy and communications advisor to the LOC.

About the Genesis Litigation Oversight Committee

The Genesis Litigation Oversight Committee (the “LOC”) is an independent, volunteer-driven body authorized by the court and elected by creditors. It was established to represent the interests of all Genesis creditors and pursue meaningful recovery—with a focus on reclaiming value through in-kind asset recovery. The LOC oversees litigation against Digital Currency Group, its CEO Barry Silbert, and key advisors. Comprised of experienced fiduciaries and legal professionals selected by creditors, the LOC is committed to exposing the misconduct that led to Genesis’s collapse and recovering billions in misappropriated assets for the benefit of all creditors. Please visit genesisloc.com for more information and follow its official X account for the latest updates on litigation developments and recovery efforts.

Contacts