Allegations from Genesis: Funds Were Deliberately Transferred

According to the complaint made public by the Delaware Chancery Court on May 19, DCG allegedly treated Genesis like a “corporate ATM,” transferring millions of dollars for its own benefit.

In the filings prepared by Genesis’s Litigation Oversight Committee (LOC), it’s claimed that around $2.1 billion worth of digital assets were moved out of the company as it spiraled toward collapse. The remaining debt reportedly stands at approximately $2.2 billion, consisting of Bitcoin, Ethereum, and various other tokens.

Striking Details in the Lawsuit Documents

The documents also allege that $1.2 billion was withdrawn from Genesis before it filed for bankruptcy. Notably, these withdrawals occurred shortly after the collapses of Terra-Luna, 3AC, and FTX — raising concerns about timing and intent. Genesis claims that while insiders recovered all of their funds, retail and institutional investors suffered massive losses.

The lawsuit highlights that Genesis operated without an independent board, with major decisions shaped entirely to benefit DCG. Genesis was allegedly forced to accept illiquid GBTC shares as collateral and was barred from selling them, even after regulatory lockup periods ended — a move that created serious valuation risks for the company.

Who’s Being Accused?

In addition to Barry Silbert, the complaint names former Genesis CEO Michael Moro, former DCG CFO Michael Kraines, DCG President Mark Murphy, and investment advisor Ducera Partners as defendants.

A second lawsuit was filed in the U.S. Bankruptcy Court for the Southern District of New York, alleging that DCG and its affiliates withdrew $1.2 billion in cash and crypto during the 12 months leading up to Genesis’s bankruptcy.

A $3.3 Billion Claim for Compensation

Through these two lawsuits, Genesis is seeking to recover more than $3.3 billion. These legal actions underline how lack of transparency and poor governance can lead to devastating consequences in the crypto industry.

Meanwhile, in April 2025, a New York judge allowed most of another civil fraud case against DCG, Silbert, and former Genesis CEO Michael Moro to proceed. This case alleges that Genesis misled investors after the collapse of Three Arrows Capital, hiding a $1 billion hole with a 10-year, low-interest promissory note.

Genesis filed for bankruptcy in early 2023, with $14 billion in outstanding loans.

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James stated, “Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts. Today’s settlement will make defrauded investors whole and should remind cryptocurrency companies that deceiving investors is illegal and will not be tolerated by my office.”

The settlement ensures that all defrauded investors will fully recover the assets they invested in the Earn program but were unable to withdraw when the program collapsed. As part of the agreement, Gemini is also banned from conducting any crypto lending programs in New York state.

The NYAG filed a complaint in October against Gemini, the crypto lending firm Genesis, and the crypto investment company DCG. James asserted that Gemini lied to investors, repeatedly assuring them that investing in the Earn program through Genesis was low risk when it was, in fact, riskier. Meanwhile, DCG, Genesis, and two executives were accused of disguising $1.1 billion in losses through a months-long campaign of misstatements, omissions, and concealment.

Last month, Gemini announced that Earn users would recover $2.18 billion of their crypto in-kind, meaning customers who lent one bitcoin would receive one bitcoin back. These distributions represent a 232% recovery from when withdrawals were halted in November 2022, according to Gemini.

Gemini stated that “final Earn distributions” will be available in customers’ accounts within seven days. The company also expressed satisfaction with the settlement, saying, “We are pleased to announce that in connection with the final Earn distribution, Gemini has entered into an agreement with the New York Attorney General (NYAG) to settle the lawsuit brought against Gemini on October 19, 2023. We are excited to deliver this full recovery to you and appreciate your ongoing patience and support throughout this process.”

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The revenue growth was attributed to the strong performance of DCG‘s subsidiaries, including Grayscale, Foundry and Luno. Grayscale, in particular, led the way with $156 million in revenue, driven by the increase in Bitcoin prices. Foundry followed with $51 million in revenue, driven primarily by staking activities and equipment sales, while Luno contributed $16 million in revenue, benefiting from increased trading volumes amid increased market volatility.

This strong financial performance underscores a broader revival in the cryptocurrency market, which has recently witnessed a surge in prices following a period of volatility. Bitcoin, for example, reached an all-time high of nearly $73,000 in March.

DCG’s comeback is also attributed to positive market developments, including the approval by US regulators of several spot Bitcoin ETFs, including the DCG-owned Grayscale Bitcoin Trust ETF (GBTC). GBTC maintained a significant market share despite competition from other ETFs, accounting for 26.5% of the spot bitcoin ETF market in the first quarter of 2024.

This financial turnaround for DCG comes after overcoming challenging circumstances in recent years, including legal disputes and financial troubles. The bankruptcy of its subsidiary Genesis and legal battles with regulatory authorities and industry figures have created significant challenges. But efforts to mitigate losses, such as the sale of CoinDesk to Bullish in November, have contributed to DCG’s financial recovery.

Overall, DCG’s strong performance in the first quarter of 2024 reflects its flexibility and adaptability in navigating the volatile cryptocurrency landscape.

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Grayscale’s Parent Company DCG, Announces Increase in Q4

In a recent communication addressed to shareholders, DCG highlighted the impressive growth in revenue during the final quarter of 2023, attributing much of it to the surge in asset prices, particularly for bitcoin. The company, which boasts ownership of Grayscale Investments among its subsidiaries, also revealed a significant uptick in its fourth-quarter EBITDA, soaring to $99 million from a negative $7 million in the corresponding period of 2022.

You might like: DCG Paid Its 700 Million Dollar Debt to Genesis!

“For the fiscal year 2023, DCG’s consolidated revenues amounted to $749 million, accompanied by an EBITDA of $275 million,” the letter to shareholders further outlined. “As of December 31, 2023, DCG’s investment portfolio, inclusive of tokens, Grayscale trust shares, venture/fund investments, and public equities, was valued at approximately $975 million.”

Despite a reduction in assets under management following the conversion of Grayscale’s spot Bitcoin ETF, the fund remains the largest of its kind and commands over a third of daily spot Bitcoin ETF trading volumes, according to data from Yahoo Finance.

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Letitia James Expands Case Aganist DCG and Gemini

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“DCG is pleased to announce that we have paid off all short-term debts to Genesis. In total, DCG has settled over $1 billion in obligations to creditors in a little over the past year, including nearly $700 million owed to Genesis, meeting all current obligations.”

pic.twitter.com/dUEi8j7nHo

— Digital Currency Group (@DCGco) January 5, 2024

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New York General Prosecutor Office has initiated legal action

Among the companies targeted by the Attorney General are cryptocurrency exchange Gemini, cryptocurrency loan provider Genesis, and cryptocurrency investment company Digital Currency Group (DCG). In addition, there are allegations against Genesis’ former CEO Michael Moro and DCG CEO Barry Silbert.

According to the claim, Genesis had borrowed within the context of the Gemini Earn program and it later transferred this assets to various entities, including different companies such as Three Arrows Capital and Alameda. As a result of some companies in the cryptocurrency sector going bankrupt, Genesis became unable to pay its debts, causing a total deficit of 1 billion dollars. The DCG committed to cover this deficit. However, it failed to fulfill it.

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The main allegation of the New York Attorney General’s Office is that, despite knowing that Genesis Global Capital’s lending operations were under-insured, Gemini did not disclose this important information to investors. Moreover, the lawsuit includes claims that at one point, the trading company Alameda, led by Sam Bankman-Fried, played a major role in the trading of Genesis Global Capital.

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Genesis was one of the leading companies in the cryptocurrency industry. However, in 2022, it suffered millions of dollars in losses as a result of a massive cyberattack and filed for bankruptcy. This left Genesis’ customers and partners in great uncertainty. Some creditors demanded the liquidation of Genesis assets, while others wanted the company to be restructured.

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DCG is a cryptocurrency investment company that was a major shareholder of Genesis. DCG played an active role in Genesis’ bankruptcy process and sought a settlement with creditors. According to DCG’s plan, creditors will be able to recover some of Genesis’ digital assets. These assets include Bitcoin, Ethereum, Litecoin, and other cryptocurrencies.

This deal could be a ray of hope for thousands of people affected by Genesis’ bankruptcy. However, the plan is not yet finalized and needs court approval. In addition, the value of digital assets must remain unchanged for the plan to be implemented. Therefore, fluctuations in the cryptocurrency market could affect the success of the plan.

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