Digital Currency Group founder accused of siphoning funds, misleading investors ahead of 2022 crypto crash
Billionaire crypto mogul Barry Silbert, founder of Digital Currency Group (DCG), is at the centre of explosive new allegations filed by creditors of his bankrupt lending firm, Genesis Capital. According to a 202-page lawsuit filed in Delaware Chancery Court, Silbert is accused of orchestrating a massive campaign of fraud and self-dealing that triggered the implosion of Genesis and contributed to the $2 trillion wipeout in the cryptocurrency market in 2022.
In stark contrast to reassurances Silbert gave prominent investors such as Mark Cuban—telling them “your money is safe, we’re solid”—the lawsuit claims Silbert began pulling back more than $100 million in loans made to Genesis just one day after receiving a market crash warning from consulting firm Oliver Wyman in April 2022.
“Silbert and his cronies recklessly operated, exploited, and then bankrupted Genesis following a spectacular campaign of fraud and self-dealing,” creditors alleged in the court filing, representing both Genesis Capital and its Asia Pacific division. The document, partially redacted, contains internal messages and other withheld company details that may soon be made public.
DCG has dismissed the claims as unfounded. “This is a baseless lawsuit that recycles the same tired, two-year old claims in an opportunistic attempt by sophisticated investors to extract additional value from DCG,” said a spokesperson. “We will vigorously defend ourselves against these spurious claims.”
The filing rewrites the history of the 2022 crypto collapse, traditionally believed to have begun in May with the $60 billion crash of TerraUSD and Luna tokens. According to creditors, the downfall began much earlier—in February 2021—when Grayscale Bitcoin Trust (GBTC), a key DCG fund, started trading below the value of its underlying assets.
Genesis, which issued $130 billion in loans to crypto investors that year, began spiralling into technical insolvency. The filings claim DCG and its affiliates drained Genesis of $800 million across 140 transactions while masking the lender’s financial turmoil. The trust’s largest holder, Three Arrows Capital, reportedly exploited pricing distortions from the GBTC’s six-month lock-up period. When GBTC fell into a discount, Genesis allegedly misvalued the fund and used it as collateral for further loans to Three Arrows, accelerating the crisis.
In June 2022, Three Arrows collapsed, leaving Genesis with a $1.1 billion shortfall. Silbert is said to have acknowledged the crisis internally, reportedly writing that “the hole in Genesis equity due to the Three Arrows exposure is something… we will need to fill by 6/30.” Creditors say Silbert’s team misled major clients such as Bitvavo and Gemini to prevent them from withdrawing over $3 billion.
Genesis executives even reassured Mark Cuban, claiming the firm had “no liquidity issues.” In response to the lawsuit, Cuban said, “First I’ve heard of it.”
To cover the shortfall, DCG and investment bank Ducera Partners allegedly arranged a 10-year, $1.1 billion “promissory note” with just 1% interest, knowing that the financial statements it was based on were “materially false and misleading,” creditors claim.
The lawsuit seeks $2.3 billion in damages and requests repayment in digital currencies, citing their potential to regain value. The case continues in both Delaware Chancery and Manhattan federal bankruptcy courts.
While DCG previously settled with the U.S. Securities and Exchange Commission, it remains locked in a civil fraud dispute with the New York attorney general, who is pursuing a separate $2 billion restitution case for Genesis customers.
