Crypto Veteran Accuses DCG of Misleading Genesis Creditors

Digital Currency Group, under Barry Silbert, announced full repayment to bankrupt subsidiary Genesis, but crypto veteran alleges deceit.
By Shraddha Sharma
BTC

Digital Currency Group (DCG), led by Barry Silbert, recently announced the full repayment of the loan to its defunct subsidiary Genesis. However, a post on X by crypto veteran Vijay Boyapati presents a different narrative. The author of ‘The Bullish Case for Bitcoin’ alleged a pattern of deceit by DCG and Silbert.

Boyapati circled back to Genesis’ insolvency in June 2022, when CEO Michael Moro, alongside DCG and Silbert, reportedly funded Genesis to hide losses.

He claims that DCG supposedly accomplished this through a “promissory note,” which Genesis treated as a current asset, despite its decade-long redemption period and below-market interest rate.

Advertisement
Advertisement

Crypto vet alleges GBTC settlement

The thread also alleges that during this period, DCG withdrew a substantial loan of 18,697 Bitcoins from Genesis, knowing the latter was insolvent. Boyapati notes that it is this specific loan that DCG and Silbert recently claimed to have repaid.

Boyapati claims that during the FTX collapse in November 2022, DCG purportedly repaid part of its Bitcoin loan to Genesis. However, he claims that it was not paid in BTC but with discounted shares of GBTC. He hints at Genesis’ partial acceptance of the repayment despite the creditors’ claim on BTC.

“There was no easy way for Genesis to sell the GBTC and convert it to BTC because GBTC was a product of its sister-company, Grayscale, and regulations prevent the sale of more than a small % of the total fund per quarter for related companies,” Boyapati added.

Advertisement
Advertisement

Creditors reportedly reach court

Amid these allegations, reports have emerged that an ad hoc group of lenders has accused DCG of failing to meet its repayment obligations to Genesis Global. According to reports that cited the court filing on Monday, DCG still owes substantial amounts in both USD and BTC.

On Friday, DCG announced that it settled $1 billion in debts, including $700 million to Genesis, amidst bankruptcy proceedings.

Advertisement
Shraddha Sharma
Shraddha's professional journey spans over five years, during which she worked as a financial journalist, covering business, markets, and cryptocurrencies. As a reporter, she has placed particular emphasis to learn about the market interaction with emerging technologies.
Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.