Genesis Global Capital has filed two lawsuits against its parent company, Digital Currency Group (DCG), and its CEO Barry Silbert, accusing them of orchestrating a calculated scheme of fraud, financial misrepresentation, and self-dealing that contributed to Genesis’ collapse.
Filed in Delaware Chancery Court, the complaints allege that DCG engaged in improper asset transfers and concealed financial vulnerabilities throughout 2022 as Genesis neared insolvency. The filings describe a pattern of reckless mismanagement, with DCG allegedly exploiting Genesis to sustain its broader operations amid mounting liquidity pressures.
The lawsuit accuses Silbert of knowingly hiding systemic risks within Genesis’ loan book—particularly its exposure to counterparties like Gemini and Bitvavo—and of taking deliberate steps to obscure these risks from investors and creditors.
Genesis argues that fraudulent transfers and misleading disclosures were part of a broader effort to shield DCG and its leadership from financial fallout. The firm is seeking over $3.1 billion in damages, citing a questionable promissory note and other internal transactions it claims were designed to deceive creditors rather than stabilize operations.
As Genesis continues its bankruptcy proceedings, the outcome of the case could have wide-reaching implications for accountability in parent-subsidiary relationships within the crypto sector.
$1.1B Promissory Note Labeled a “Liquidity Mirage”
Central to Genesis’ case is a controversial $1.1 billion promissory note issued by DCG in 2022—an instrument now alleged to have been a misleading attempt to mask the firm’s liquidity crisis.
According to the Delaware filings, the 10-year note—bearing only a 1% interest rate—was framed as a financial backstop following Genesis’ exposure to the collapse of Three Arrows Capital. However, Genesis now argues the note had no actual liquidity value and was intended to buy time and calm panicked stakeholders.
The lawsuit, backed by the Genesis Litigation Oversight Committee (LOC)—a bankruptcy court-appointed body representing creditors—accuses DCG and its leadership of distributing misleading financial reports and withholding material information to prevent mass withdrawals. During this time, the LOC claims insiders were working to extract value from Genesis before its eventual collapse.
The May 2022 collapse of the Terra ecosystem is cited as a critical moment. Within days of LUNA’s crash, Genesis reportedly faced mounting stress, but instead of acknowledging the exposure, DCG allegedly chose to conceal the risk and continue business as usual.
Genesis Seeks Return of $1.2B in Assets From DCG
The lawsuit also details a series of disputed financial transactions that Genesis claims were made to benefit DCG and insiders at the expense of creditors. These include:
- $448 million transferred directly to DCG
- $136 million routed to DCG’s international unit
- $101 million sent to HQ Enhanced Yield Fund, a related vehicle
- $34 million paid in taxes on DCG’s behalf
Genesis is now seeking to recover these funds—both in cash and in-kind digital assets—including over 19,000 BTC, 69,000 ETH, and 17 million tokens from various altcoins. The company alleges that these assets were wrongfully extracted during a period of escalating financial instability.
This legal escalation follows a turbulent history between the two companies. In January 2025, DCG and former Genesis CEO Michael Moro reached a $38 million settlement with the SEC over misleading disclosures tied to the collapse of Three Arrows Capital. Although neither party admitted wrongdoing, the SEC stated their conduct gave a “materially false impression” of Genesis’ financial health.
Case Adds Pressure to Restructuring and Crypto Governance
By mid-2024, Genesis and DCG had tentatively agreed to a $2 billion settlement as part of a broader restructuring effort. However, the latest litigation threatens to complicate those negotiations and casts new doubt over the resolution of creditor claims.
The case underscores the risks of complex, opaque financial arrangements between affiliated crypto entities—especially in times of systemic stress. It also raises deeper questions about internal controls, governance structures, and fiduciary responsibility within large digital asset conglomerates.
As Genesis fights to recover billions for its creditors, the legal battle with DCG could help shape future regulatory and legal expectations for parent-subsidiary conduct across the crypto industry.
Quick Facts
- Genesis Global Capital is suing parent company DCG and CEO Barry Silbert for $3.1 billion, alleging fraud, asset diversion, and misleading financial practices.
- The lawsuit centers on a $1.1 billion promissory note Genesis says was a deceptive tool with no liquidity value following the collapse of Three Arrows Capital.
- Genesis is seeking to claw back $1.2 billion in cash and crypto assets, including 19,000 BTC and 69,000 ETH allegedly transferred to DCG and affiliates.
- The case follows a $38 million SEC settlement and could further disrupt DCG’s $2 billion restructuring agreement with Genesis.
