Crypto lender Genesis and its subsidiaries filed two lawsuits against its parent company, Digital Currency Group (DCG), DCG CEO Barry Silbert and other executives, seeking to recover what it called fraudulent transfers of crypto worth billions of dollars.
In total, Genesis and its creditors are seeking $3.2 billion across the two lawsuits. It is seeking to recover $2.2 billion in a suit filed in the Court of Chancery of the State of Delaware and more than $1 billion in a suit at the Bankruptcy Court for the Southern District of New York.
The New York filing says money was withdrawn from Genesis to repay DCG, Silbert, affiliates and other insiders in the year that led up to Genesis filing for Chapter 11 even though the company was insolvent.
They “knew through their close relationship with Genesis that its business was on the brink of collapse” and took the opportunity to withdraw all their assets and recover 100% of crypto and dollar loans made to the platform while members of the public were “kept in the dark,” the suit alleges.
Genesis suspended withdrawals in November 2022 and went into bankruptcy the following year.
“Silbert and his cronies recklessly operated, exploited, and then bankrupted Genesis following a spectacular campaign of fraud and self-dealing,” the Delaware filing alleges.
Its creditors are still short $2.2 billion worth of crypto assets including bitcoin BTC, ether ETH and other tokens, the filing said.
Alongside seeking an award of damages, Genesis wants an equitable trust over any assets the “defendants improperly took or converted during their tenure as managers, officers, directors,” the filing said.
“These baseless lawsuits recycle the same tired, two-year old claims in an opportunistic attempt by sophisticated investors to extract additional value from DCG,” a spokesperson for the company said. “We worked in good faith with a wide range of stakeholders to try to achieve a comprehensive resolution of the DCG-related aspects of the Genesis bankruptcy. We will vigorously defend ourselves against these spurious claims.”