A federal judge has revived a fraud claim against Barry Silbert, Digital Currency Group, and other defendants in a lawsuit tied to the failed Genesis Yield program.
Summary
- A revived fraud claim keeps Barry Silbert and DCG under legal pressure over Genesis Yield.
- The court let federal securities claims continue while limiting several state consumer protection claims.
- Genesis Yield investors allege DCG misled customers before withdrawals stopped and bankruptcy followed in 2023.
The ruling revises an earlier February order after the court agreed to review state-law claims again.
The case is before Judge Stefan Underhill in the U.S. District Court for the District of Connecticut. Investors say Silbert, DCG, and other defendants misled customers about Genesis’ financial condition and risk controls before the lender froze withdrawals and filed for bankruptcy in early 2023.
Court narrows state-law claims
The court revived the New York common law fraud claim after plaintiffs argued that the Class Action Fairness Act gave the court power to hear their state-law claims. The revised order brought those claims back before the judge narrowed which ones could continue.
Consumer protection claims under Illinois, Kansas, Nevada, and Texas law were dismissed. Claims under California, Florida, and New York law were stayed. The February decision allowing federal securities claims to proceed remains unchanged, according to the case update.
Genesis Yield collapse remains central
Genesis Yield allowed customers to deposit crypto and earn interest payments. Plaintiffs claim the defendants knew Genesis faced deep financial stress but still presented the lending product as safer than it was.
DCG has previously rejected similar claims. The company has called allegations against it “baseless” and said it would defend itself. The latest ruling does not decide whether the claims are true. It allows part of the lawsuit to move forward.
The case sits alongside other legal disputes tied to Genesis’ collapse. As previously reported, Genesis filed lawsuits against DCG, Silbert, and other insiders in 2025, seeking to recover more than $1 billion in alleged improper transfers.
Prior settlements frame the dispute
Genesis entered bankruptcy after the failures of Three Arrows Capital and FTX placed pressure on crypto lenders. As previously reported, a bankruptcy judge approved a plan in 2024 allowing Genesis to distribute billions in cash and crypto to creditors while rejecting a DCG challenge.
Genesis also reached a $2 billion settlement with the New York Attorney General’s office. The settlement created a victims’ fund for creditors and resolved claims against Genesis linked to investor losses.
DCG later reached a separate settlement with the U.S. Securities and Exchange Commission. The SEC said DCG and former Genesis CEO Soichiro “Michael” Moro agreed to pay $38.5 million to settle charges that they misled investors about Genesis’ financial condition. They did not admit or deny the findings.
The revived claim adds another active legal track for DCG and Silbert. The court will now allow the New York fraud claim and federal securities claims to continue, while several state consumer claims remain paused or dismissed.
