What You Need to Know:

• Crypto lender Genesis and its subsidiaries have launched two lawsuits against their parent company, Digital Currency Group (DCG), alongside CEO Barry Silbert and other executives.
• Genesis aims to reclaim approximately $3.2 billion through these lawsuits.

Lawsuit Overview
Genesis and its creditors are pursuing $3.2 billion across two cases: one for $2.2 billion submitted to the Court of Chancery in Delaware and another exceeding $1 billion at the Bankruptcy Court for New York’s Southern District.

The filing in New York contends that funds were removed from Genesis to settle debts with DCG, Silbert, affiliates, and other insiders during the period leading up to Genesis’s Chapter 11 filing, despite the company’s insolvency.

The document alleges that defendants “knew from their close ties to Genesis that its operations were on the verge of collapse” and seized the chance to recover their entire loans to the platform while leaving public stakeholders uninformed.

Genesis halted withdrawals in November 2022 and subsequently filed for bankruptcy the following year. The Delaware suit accuses Silbert and associates of carelessly operating and exploiting Genesis, ultimately leading to its bankruptcy through fraudulent and self-serving actions.

Creditors are currently owed $2.2 billion in cryptocurrency assets, including Bitcoin and Ethereum.

In addition to claiming damages, Genesis seeks an equitable trust over assets the defendants allegedly misappropriated.

A spokesperson for DCG responded, stating, “These baseless lawsuits recycle the same tired, two-year-old claims in an opportunistic attempt by sophisticated investors to extract additional value from DCG. We worked in good faith with a wide range of stakeholders to attempt a comprehensive resolution of the DCG-related aspects of the Genesis bankruptcy. We will vigorously defend ourselves against these groundless claims.”