Jun 25, 2025

Genesis Reveals DCG Knew of Legal Risks, Mismanagement Before Collapse Share Newly unsealed court documents from bankrupt crypto lender Genesis claim that its parent company, Digital Currency Group (DCG), had long been aware of the financial trouble brewing inside Genesis—and took steps to protect itself rather than fix the issues. Genesis is now seeking to recover over $3.3 billion from DCG, Silbert , and other insiders. The complaint, filed in the Delaware Court of Chancery, includes internal emails and memos that suggest DCG executives were preparing for legal blowback well before Genesis filed for bankruptcy. One memo from DCG’s former CFO Michael Kraines warned that if Genesis were to “blow itself up,” the fallout could be severe enough to drag down DCG with it. In a message to then-Genesis CEO Michael Moro , Kraines posed the question bluntly: “Could [Genesis] somehow tank DCG to the profound detriment of its board and shareholders?” He attached a detailed “war-gaming” strategy that now reads like a prelude to the current lawsuit. The complaint also points to a pattern of missed warnings and delayed reactions. DCG hired outside risk consultants who flagged growing problems—but their advice either went unheeded or was acted on too late. By the time internal concerns were formalized, Genesis’s loan book tripled, and external auditors already identified major weaknesses in financial controls dating back to 2020. An internal “contagion risk” committee wasn’t convened until nine months after it was greenlit by DCG’s board. Kraines, perhaps half-joking, remarked in an email that the delay “just made my future deposition a bit easier.” Culture of Obedience, Not Oversight The filing paints a picture of a company more concerned with loyalty than oversight. According to the complaint, Genesis employees were expected to put DCG’s priorities first—even when it meant ignoring red flags. In one message, a Genesis insider accused DCG of keeping the firm afloat “so [it] could pillage the balance sheet… give [the] impression of stability, then borrow while they [could] to get the cash out.” Internally, the workplace was described as a “culture of submission.” “These are not merely technical disputes over intercompany accounting,” said the Genesis Litigation Oversight Committee in a statement. “The Delaware Complaint exposes a deliberate scheme by DCG and Barry Silbert to pillage Genesis as it collapsed.” The complaint also accuses DCG of misleading the public in the wake of the Three Arrows Capital (3AC) collapse. Genesis staff were reportedly given scripts to read, while DCG leadership—including CEO Barry Silbert —downplayed the crisis in public posts. Two specific transactions are also under scrutiny: a $1.1 billion promissory note issued in June 2022, and a September “roundtrip” deal that the complaint alleges was arranged to mask insolvency and mislead creditors.