Unsealed Genesis Lawsuit Alleges DCG ‘Alter Ego’ Scheme
A newly unsealed complaint from bankrupt crypto lender Genesis reveals that executives at its parent company, Digital Currency Group (DCG), were aware of financial mismanagement and legal risks associated with Genesis. DCG's CFO, Michael Kraines, acknowledged the risk of Genesis being viewed as DCG's "alter ego" and prepared for potential legal fallout in a memo. Despite warnings from third-party risk consultants and internal documents indicating serious deficiencies in Genesis's financial controls, DCG reportedly ignored these risks. A "contagion" risk committee was formed but delayed its first meeting by nine months. The complaint also highlights a toxic workplace culture where Genesis employees prioritized DCG's interests over governance. Allegations of public deception include scripted messages to downplay the crisis following the Three Arrows Capital collapse. Genesis seeks to recover over $3.3 billion from DCG, Silbert, and other insiders, citing a deliberate scheme to exploit Genesis during its collapse.
