Judge revives fraud claim against DCG and Silbert
- A U.S. court revived a New York fraud claim against Digital Currency Group and Barry Silbert over Genesis Yield.
- Federal securities claims will continue, while several state consumer protection claims were dismissed or stayed.
- The ruling keeps legal pressure on DCG as litigation linked to Genesis' 2023 collapse continues.
Digital Currency Group and its founder Barry Silbert will continue facing a New York common law fraud claim after a U.S. federal court revived the allegation while allowing existing federal securities claims to proceed.
The revised ruling updates a February decision after the court agreed to reconsider state-law claims, with investors alleging DCG and other defendants misrepresented the financial condition and risk controls of Genesis Yield before withdrawals were halted and bankruptcy followed in early 2023.
The latest ruling does not determine liability, and DCG has previously described similar allegations as "baseless" and said it intends to defend itself.
The court dismissed consumer protection claims under Illinois, Kansas, Nevada and Texas law, while claims under California, Florida and New York law were stayed, leaving the revived New York fraud claim and federal securities claims to move forward.
The case remains one of several legal proceedings linked to Genesis, and following the ruling there was no immediate market reaction because DCG is not a publicly listed company.
Genesis entered bankruptcy after the collapses of Three Arrows Capital and FTX placed significant pressure on crypto lenders, before a bankruptcy court approved a creditor repayment plan in 2024 despite objections from DCG.
The dispute follows other legal actions involving Genesis, including lawsuits seeking more than US$1 billion from DCG and former executives, a US$2 billion settlement with the New York Attorney General, and a US$38.5 million settlement between DCG, former Genesis CEO Soichiro "Michael" Moro and the U.S. Securities and Exchange Commission.