Crypto lender Genesis Global has filed two lawsuits against its parent firm, Digital Currency Group (DCG), and its CEO Barry Silbert, alleging they orchestrated a fraudulent financial strategy that drained Genesis of assets and forced the company into bankruptcy.

According to filings made in the Delaware Court of Chancery and the U.S. Bankruptcy Court for the Southern District of New York, Genesis claims that Silbert and DCG conducted a “long-running scheme of deception and self-dealing,” transferring funds out of Genesis at the expense of its creditors.

Genesis Seeks Billions in Asset Recovery

Genesis is demanding the return of at least $2.2 billion in Bitcoin, Ethereum, and other cryptocurrencies that were allegedly misappropriated through backdoor transactions. The filings highlight a pattern of financial mismanagement, including:

• Roughly $450 million in cash transfers from Genesis to DCG;
  
• Over $297 million in digital assets moved to DCG International;
  
• $34 million paid under the guise of tax settlements, which Genesis now considers illegitimate.
  

Court documents reveal that many of these transactions occurred during periods of extreme financial distress, especially following the 2022 collapse of Terra-Luna and FTX.

Claims of Early Insolvency and Ignored Warnings

Genesis asserts that it was already functionally insolvent by the end of 2021, carrying more than $14 billion in loans with no sufficient internal controls in place. The lawsuits claim that DCG had access to this information through internal reports and warnings from consultancy Oliver Wyman, but failed to act.

“Genesis had no meaningful safeguards, and DCG knew it,” the filing alleges.

The lender eventually filed for bankruptcy protection in January 2023, disclosing debts to top creditors such as Gemini and VanEck. In August 2024, Genesis’ restructuring plan was approved, leading to the return of over $4 billion in assets to creditors.

Regulatory Heat Mounts

The lawsuits come as the Securities and Exchange Commission (SEC) continues to investigate the dealings of Genesis and DCG. In a related case earlier this year, DCG agreed to a $38 million settlement over charges tied to misleading investors and violating securities laws.

Although Grayscale Investments is not a named defendant, the complaint references it as benefiting from the scheme, raising questions about broader involvement within the DCG ecosystem.

The outcome of these lawsuits could reshape the legal landscape for crypto holding companies and raise new standards for inter-company disclosures, governance, and fiduciary duty within the digital asset sector.