Genesis accuses its parent company DCG and Barry Silbert of orchestrating massive fund withdrawals just before its bankruptcy, leaving creditors in the lurch.
Genesis Strikes Again at Parent DCG and Barry Silbert
A legal battle is underway once again. Crypto lender Genesis has filed two lawsuits against its parent company, Digital Currency Group (DCG), its founder Barry Silbert, and several executives. The focus: massive withdrawals made while Genesis was already sinking, in complete silence towards the public.
Silbert and his cohorts recklessly managed, operated, and bankrupted Genesis following a spectacular campaign of fraud and breach of trust.
3.2 Billion at Stake, Two Courts Seized
The first lawsuit was filed in the Delaware Chancery Court for $2.2 billion, the second in the New York Bankruptcy Court for over a billion more. The aim: to recover what Genesis claims were fraudulent transfers made in favor of DCG, Silbert, and their associates in the months before the bankruptcy.
These withdrawals allowed insiders to recover 100% of their loans in dollars and crypto, while users remained locked out. According to the complaint, these leaders knew that Genesis was insolvent, but chose to help themselves first, leaving a colossal debt to its creditors.
A “Spectacular Fraud” Operation at DCG
In the Delaware filing, words are heavy: Silbert and his close circles would have “exploited and destroyed Genesis through a spectacular campaign of fraud and self-control.” The document also calls for the establishment of an equitable trust on all assets improperly acquired during their tenure.
Genesis had suspended withdrawals in November 2022 before declaring bankruptcy in early 2023. Today, its creditors still demand $2.2 billion in assets, mainly in Bitcoin, Ethereum, and other tokens.
DCG Rejects and Counters
On DCG‘s side, the response is immediate. A company spokesperson denounces “unfounded, opportunistic complaints recycling allegations that are two years old.” DCG claims to have worked “in good faith” with various stakeholders to resolve issues related to Genesis and promises to defend itself “vigorously.”
The legal battle has only just begun, but one thing is certain: it may further shake confidence in the institutional crypto ecosystem.
