Genesis Sues Parent Company DCG to Recover Over $1 Billion in Transfers, Alleging Internal Transfer During Insolvency

The bankrupt crypto lending platform Genesis Global Capital sued its parent company, Digital Currency Group (DCG), on May 19 in the Bankruptcy Court for the Southern District of New York, seeking to recover approximately $1.2 billion in "preferential transfers" and fraudulent payments made before its bankruptcy in 2022.

The lawsuit alleges that DCG and its affiliates, including founder Barry Silbert, transferred funds among themselves while Genesis was insolvent. This included transferring over $580.00 million in crypto assets and $120.00 million in cash to DCG itself, international subsidiaries, and its HQ Enhanced Yield Fund, as well as $34.00 million in taxes. Genesis claims that DCG was aware of the risks at the time and misled users. The transfers occurred during the collapse of Terra-Luna, Three Arrows Capital, and FTX, with the aim of protecting itself and evading debt.