At the core of the lawsuit is the claim that Silbert and other insiders ignored basic risk controls and pushed Genesis into reckless lending practices that ultimately served to benefit DCG’s crown jewel, Grayscale Investments.DCG withdrew $1.2 billion from Genesis before bankruptcyThe complaint describes Genesis as having operated without a board or independent oversight, with key decisions made to enrich DCG at the expense of depositors.“In particular, Silbert, Kraines, and Murphy orchestrated sham transactions at the end of the second and third quarters of 2022, when Genesis’s books closed, to deceive Genesis lenders into believing that DCG was providing liquidity and equity to Genesis,” the complaint states.
Source: GenesisLOCRelated: Bankrupt crypto firm Genesis completes restructuringA second complaint, filed in the US Bankruptcy Court for the Southern District of New York, alleges that DCG and its affiliates withdrew over $1.2 billion in US dollars and cryptocurrencies during the year leading up to Genesis’s bankruptcy.
Genesis also said it was forced to accept illiquid Grayscale Bitcoin Trust (GBTC) shares as collateral and was barred from selling them, creating major valuation risks.“GBTC was illiquid because it could not be sold for six months after its purchase due to a lockup period imposed by the SEC, and DCG prohibited Genesis from reselling GBTC even after the lockup period ended,” the complaint states.
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Author / Journalist: Cointelegraph by Amin Haqshanas
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