TLDR
- Grayscale is moving ahead with plans for a $33 billion IPO despite rising legal challenges.
- The Genesis lawsuit includes two major complaints filed in May 2025 by the Litigation Oversight Committee.
- The Delaware complaint alleges that DCG and Barry Silbert misused Genesis as a financial tool.
- The bankruptcy court filing seeks to recover over $1.2 billion in alleged improper transfers.
- DCG has denied the allegations and filed motions to dismiss the lawsuits.
Grayscale’s $33 billion IPO plans face serious threats due to rising legal pressure from the ongoing Genesis lawsuit. Barry Silbert’s leadership at Digital Currency Group (DCG) has come under scrutiny over alleged misconduct tied to Genesis’s collapse. The outcome of the lawsuit may directly impact the success of the first principal crypto asset manager’s public offering.
Genesis Lawsuit Targets DCG and Silbert
The Genesis lawsuit has taken center stage with two legal actions filed in May 2025 by the Genesis Litigation Oversight Committee. One complaint, filed in Delaware’s Court of Chancery, accuses DCG and insiders of reckless misuse of Genesis assets. It claims they operated Genesis like a “treasury” and manipulated financial disclosures.
Additionally, the U.S. Bankruptcy Court in New York received a second lawsuit seeking over $1.2 billion in clawbacks. The committee targets payments allegedly made under a “tax sharing agreement” they argue never existed. It demands the return of creditor funds in digital assets, escalating tensions between DCG and Genesis.
DCG has filed motions to dismiss both cases, denying any wrongdoing and citing reasonable faith efforts during market turbulence. A spokesperson stated that DCG “worked tirelessly to try and save Genesis and prevent its bankruptcy.” These lawsuits, however, remain a significant obstacle for Grayscale’s IPO preparations.
Promissory Note Dispute Complicates IPO Prospects
The Genesis lawsuit also centers on a controversial $1.1 billion promissory note issued by DCG in 2022. This note aimed to cover the $2.36 billion loss from Genesis’s loan exposure to Three Arrows Capital, which defaulted in June 2022. However, Genesis now claims DCG used the note to mislead stakeholders about its financial health.
In August 2025, DCG countersued, seeking relief from the note and $105 million in alleged overpayments to Genesis. DCG argues recoveries from Three Arrows Capital, estimated at $2.8 billion by May 2024, nullified the note’s value. According to court filings, DCG continued to pay Genesis $106 million after the note should have been void.
Meanwhile, Genesis pursues $2.2 billion in digital assets and over $1 billion in fraudulent transfers in separate lawsuits. It alleges DCG extracted $450 million in crypto and $300 million through international transfers. These claims further complicate the legal challenges that are complicating Grayscale’s IPO timeline.
Regulatory Fines and New Allegations Add Pressure
The Genesis lawsuit has also triggered regulatory enforcement, adding more pressure on Grayscale’s IPO path. In January 2025, the SEC fined DCG $38 million and its former CEO, Michael Moro, $500,000. The SEC found they misrepresented Genesis’s financial status after the Three Arrows collapse.
Filings revealed that DCG executives were aware of over $1 billion in losses at Genesis while projecting solvency to investors. These revelations may influence how regulators assess Grayscale’s IPO filings and disclosures. Grayscale confidentially submitted its IPO documents to the SEC in June.
Compounding issues, the FTX Recovery Trust filed a $1.15 billion lawsuit against Genesis Digital Assets in September. It alleges Sam Bankman-Fried used misappropriated funds to buy Genesis shares at inflated values between 2021 and 2022. These allegations intensify scrutiny across all entities associated with Genesis.
Grayscale continues to move ahead with its IPO as Silbert returns as chairman, reaffirming its commitment despite legal uncertainty. However, underwriters and regulators are expected to closely assess DCG’s financial ties and disclosures.
