Delaware Complaint Highlights

DCG’s Alter Ego

  • “DCG’s compliant pawn, Genesis’s former ‘CEO’ Moro, unsurprisingly stood by and allowed DCG to pilfer Genesis; the Genesis employees who disagreed with Silbert or refused to do DCG’s bidding were terminated and faced Silbert’s influential wrath in the industry” (paragraph 8)

  • “By Silbert’s design, the various Genesis businesses were intertwined. Lenders would deposit traditional currency or cryptocurrencies with GGC.  GGC would either loan those assets directly to third parties or transfer them to GAP to loan to counterparties based in Asia, including 3AC” (paragraph 51)

  • “Genesis did not have a separate, independent existence from DCG. This was no secret at DCG” (paragraph 51)

Fraudulent Accounting Cover-Ups

  • “Silbert, Kraines, and Murphy each aided and abetted Moro’s breaches of fiduciary duty to Genesis, including to act in the interest of Genesis and its creditors. Instead of acting in those interests, Moro knowingly failed to implement proper risk protocols, signed the commercially unreasonable Promissory Note, and knowingly permitted and participated in DCG’s campaign of lies directed at the public Genesis creditors” (paragraph 277)

  • “Silbert, Kraines, and Murphy caused DCG to issue the Promissory Note to Genesis, which was designed and accounted for to conceal Genesis’s $1.1 billion unsecured exposure to 3AC" (paragraph 277)

  • “In the wake of the 3AC collapse, through its officers and employees, DCG drafted, edited, approved, and disseminated numerous misrepresentations and omissions about Genesis’s financial state. Those misrepresentations falsely indicated that, among other things: (1) Genesis was solvent when it was not; (2) Genesis was adequately capitalized when it actually was severely undercapitalized; (3) Genesis’s balance sheet was “strong” when an accurate Genesis balance sheet would have reflected a $1.1 billion loss to 3AC; (4) the Promissory Note was a current asset worth $1.1 billion when actually the Promissory Note was illiquid and its real value was worth a tiny fraction of that amount.”(paragraph 294)

False Marketing Campaign

  • “DCG required Genesis employees to recite the Silbert lines to customers when answering questions about Genesis’s financial state in the wake of the 3AC collapse. These DCG-scripted falsehoods were designed to induce customers, counterparties, and lenders, including those of Gemini and Bitvavo, to keep their valuable crypto and fiat currencies on the Genesis platform and continue depositing more” (paragraph 12)

  • “These DCG-scripted falsehoods were designed to induce customers, counterparties, and lenders (including Bitvavo and those of Gemini) to keep their valuable crypto and fiat currencies on the Genesis platform and to continue depositing even more assets with Genesis.” (paragraph 12)

  • "Needing to maintain the illusion that all was well, to protect DCG and his crypto empire, Silbert focused on "continuing] to perpetuate" the idea "that [G]enesis [wa]s the 'blue chip' in this mess. Silbert knew that was a lie. But as he intended, Genesis's lenders relied on the June 15 Statement, which created a false impression that things at Genesis were business as usual. (paragraph 134)

    Tweet by Genesis on June 15, 2022, retweeted by Barry Silbert despite continued heightened market volatility:

Systemic Control Failures

  • “Genesis was severely undercapitalized, lacked reasonable risk management, and had no board of directors or independent management of its own." (paragraph 1)

  • "As DCG itself admitted internally, Defendants adopted a lending program at Genesis that was "flying blind" in terms of risk management" (paragraph 2)

  • "DCG was also concerned about losing control of the company, because "[i]n bankruptcy, Genesis creditors would take control of any DCG stock held by Genesis" (paragraph 153)

Knowledge of Wrongdoing

  • “Silbert himself admitted that, while Genesis's primary unsecured exposure was to borrowers engaging in the GBTC Trade, "th[o]se loans are all ring-fenced at Genesis Capital and no lenders have recourse against DCG. Doesn't mean they wouldn't come after us of course, but we are not legally on the hook" (paragraph 72)

  • "Kraines even admitted that a future plaintiff could argue that Genesis was DCG's alter ego. He wrote to Moro and others to pose a "war-gaming exercise" addressing the arguments the plaintiff would make if Genesis went bankrupt, which closely track the allegations in this Verified Complaint" (paragraph 53)

False Narrative, Real Losses

  • “Silbert and his cronies recklessly operated, exploited, and then bankrupted Genesis following a spectacular campaign of fraud and self-dealing. Silbert used Genesis to enrich himself and finance his broader cryptocurrency empire on off-market, unfair terms before overseeing its demise” (paragraph 1)

  • “At all relevant times, Silbert and DCG dominated and controlled Genesis for their own benefit” (paragraph 1)

  • “Defendants acted to conceal Genesis’s insolvency while Silbert rushed to insulate himself, his friends, and DCG from the inevitable fallout, in disregard of the fiduciary duties they owed to Genesis for the benefit of its residual claimants, including individual and institutional creditors” (paragraph 5)

  • “Silbert, Kraines, Murphy, and Moro knew Genesis was too highly concentrated with 3AC, and knew of the mismatch between the size of the loans made to 3AC and the value of 3AC’s collateral.  But under Moro’s DCG-driven leadership, massive loans were issued to 3AC despite these risks.  Approving these under-secured loans benefited DCG while imperiling Genesis with the risk of insufficient collateral in the event of 3AC’s default or liquidation” (paragraph 104)

Breach of Fiduciary Duties & Control

  • "Genesis did not have a separate, independent existence from DCG. This was no secret at DCG. Internal DCG communications exhaustively document DCG's understanding that Genesis was DCG's alter ego" (paragraph 53)

  • "[DCG] devot[ed] substantial resources towards an analysis of a plaintiff's ability to pierce the
    DCG corporate veil in the event of a hypothetical blow up at Genesis" (paragraph 54)

  • "Thus, in mid-August 2022, DCG stopped using its intermediary Genesis and completely took over the Bitvavo relationship, including negotiating loan terms and communicating about Genesis's financial state" (paragraph 185)

  • “Silbert used Genesis to enrich himself and finance his broader cryptocurrency empire on off-market, unfair terms before overseeing its demise.” (paragraph 1)

  • “At all relevant times, Silbert and DCG dominated and controlled Genesis for their own benefit.” (paragraph 1)

  • “Defendants acted to conceal Genesis’s insolvency while Silbert rushed to insulate himself, his friends, and DCG from the inevitable fallout, in disregard of the fiduciary duties they owed to Genesis for the benefit of Genesis’s residual claimants, including individual and institutional creditors.” (paragraph 5)

  • “DCG, Silbert, Kraines, and Murphy used their managerial control over Genesis to require Genesis to loan to counterparties that would engage in a speculative trade.” (paragraph 69)

  • “The GBTC Trade enriched DCG and Silbert via Grayscale and imperiled Genesis and its lenders. DCG’s prerogative was for Genesis to lend to counterparties engaged in the GBTC Trade, while Grayscale and DCG profited risk-free.” (paragraph 70)

  • “There was no risk assessment, approval process, or collateral needed: When DCG demanded liquidity, its piggy bank Genesis delivered.” (paragraph 104)

Bankruptcy Complaint Highlights

  • “Plaintiffs bring this action to avoid and recover ‘in kind’ preferential and fraudulent transfers of cryptocurrency and U.S. Dollars (“USD”) now worth more than one billion dollars.  These transfers were made to Genesis’s parent company, DCG, its founder and CEO, Barry Silbert, and various DCG affiliates and other insiders in the year leading up to Plaintiffs’ chapter 11 filings, all while Genesis was insolvent.” (paragraph 1)

  • “Insider Defendants typically initiated their transfers around watershed events in the cryptocurrency industry…when the Insider Defendants knew through their close relationship with Genesis that its business was on the brink of collapse.” (paragraph 1)

  • “DCG and Barry Silbert worked to fend off a run on the bank at Genesis, falsely assuring Genesis’s customers that the business was ‘strong’ and had a ‘ton of liquidity.’” (paragraph 1)

  • “While the Insider Defendants withdrew their assets and recovered 100% on USD and cryptocurrency loans from Genesis’s crippled platform, the public was kept in the dark[.]” (paragraph 1)

  • “While nothing was done to address the systemic risks at Genesis, Genesis’s liabilities continued to exceed a fair valuation of its assets, and Genesis was positioned to collapse when the volatile cryptocurrency industry had a prolonged market downturn.  That is exactly what happened in 2022.” (paragraph 64)

  • “The Terra-Luna Collapse strained other crypto companies, causing a cascading effect as crypto holders pulled funds from other crypto exchanges.  Genesis’s largest lenders began asking questions about the safety of their assets on the Genesis platform.  These creditors were met with false assurances.” (paragraphs 70-71)

  • “Throughout the year prior to Genesis’s bankruptcy filing, DCG and Genesis falsely reassured customers that Genesis’s balance sheet was ‘strong’ and that it had a ‘ton of liquidity’ to try to stave off the inevitable run on the bank.  Meanwhile, the Insider Defendants called their loans ahead of other creditors in aggregate amounts of USD and cryptocurrency worth over $1.2 billion as of March 31, 2025.” (paragraph 87)

  • “Insider Defendants recovered no less than $407 million in value in just six critical weeks: the two weeks following each of the Terra-Luna Collapse, the 3AC Collapse, and the FTX Collapse[.]” (paragraph 94)

  • “Altogether, during the [1 year before Genesis filed for bankruptcy], the Insider Defendants called USD loans totaling more than $620 million and cryptocurrency loans in excess of $216 million. […] As of March 31, 2025, that cryptocurrency is worth over $582 million, and the Preferential Transfers are worth over $1.2 billion.” (paragraph 95)