Genesis Global Capital, the crypto lending firm that filed for bankruptcy in 2023, has launched two major lawsuits against its parent company, Digital Currency Group (DCG), and CEO Barry Silbert. The allegations are serious—fraud, reckless mismanagement, and siphoning over $1 billion in assets from Genesis.
At the heart of the case: Genesis’s creditors are still owed over $2.2 billion, and the company now seeks to recover $3.3 billion through legal action.
Key Allegations Against DCG and Barry Silbert
- Sham transactions and insider deals allegedly drained Genesis of its assets.
- Genesis accuses DCG of using the company like a “corporate ATM.”
- The lawsuits claim strategic mismanagement led to forced exposure to risky, illiquid assets like Grayscale Bitcoin Trust (GBTC) shares.
- Over $1.2 billion was withdrawn from Genesis after it was allegedly already insolvent.
Let’s break down the two lawsuits.
Lawsuit 1: Genesis vs DCG in Delaware Court
Filed in Delaware, this lawsuit targets fraud and reckless mismanagement by DCG and CEO Barry Silbert. The filing outlines a series of questionable decisions made to favor DCG and its subsidiaries—especially Grayscale—at the expense of Genesis and its creditors.
Highlights:
- Genesis claims it was forced to accept GBTC shares as collateral, a move that amplified risk due to their illiquidity.
- DCG is accused of draining over $1 billion in value through insider loans and financial engineering.
- The suit alleges DCG prioritized its own interests while retail and institutional lenders suffered massive losses.
Lawsuit 2: Bankruptcy Filing in New York Court
The second lawsuit, filed in the New York bankruptcy court, dives deeper into insider withdrawals and mismanagement during market turmoil.
Key Points:
- DCG allegedly withdrew $1.2 billion in crypto and cash while Genesis was insolvent.
- The withdrawals occurred during major crypto crashes—including Terra-Luna, 3AC, and FTX.
- Meanwhile, insiders reportedly recovered almost all their funds, while external clients remain at a loss.
Who’s Paying the Price?
Despite the legal action, it’s the retail and institutional clients who bear the brunt of Genesis’s collapse. With over $14 billion in outstanding loans at the time of its bankruptcy, the scale of the fallout is enormous.Genesis aims to recover $3.3 billion through these lawsuits. The outcome could significantly impact DCG and the broader crypto lending ecosystem.
Never Miss a Beat in the Crypto World!
Stay ahead with breaking news, expert analysis, and real-time updates on the latest trends in Bitcoin, altcoins, DeFi, NFTs, and more.
Earn more PRC tokens by sharing this post. Copy and paste the URL below and share to friends, when they click and visit Parrot Coin website you earn: https://parrotcoin.net0
PRC Comment Policy
Your comments MUST BE constructive with vivid and clear suggestion relating to the post.
Your comments MUST NOT be less than 5 words.
Do NOT in any way copy/duplicate or transmit another members comment and paste to earn. Members who indulge themselves copying and duplicating comments, their earnings would be wiped out totally as a warning and Account deactivated if the user continue the act.
Parrot Coin does not pay for exclamatory comments Such as hahaha, nice one, wow, congrats, lmao, lol, etc are strictly forbidden and disallowed. Kindly adhere to this rule.
Constructive REPLY to comments is allowed