SUMMARY
SGT achieved a major victory on February 24, 2026, when Judge Stefan Underhill denied the defendants' motion to dismiss, allowing the case to move forward on behalf of investors who allege they were defrauded when DCG and Silbert concealed the insolvency of Genesis Global Capital. The court found that the plaintiffs have adequately pleaded violations of both the Securities Act of 1933 and the Securities Exchange Act of 1934, and that the Genesis lending program constituted a security under federal law. The ruling also lifted the PSLRA discovery stay, allowing plaintiffs to begin obtaining evidence.
OVERVIEW
The lawsuit alleges that DCG, Silbert, and other executives engaged in a scheme to defraud investors by misrepresenting Genesis's financial condition even as its largest borrower – hedge fund Three Arrows Capital, which held 30 percent of Genesis's total loan book – collapsed into bankruptcy in June 2022. Rather than disclose the resulting impairment, DCG orchestrated a transaction in which it purchased the uncollectable Three Arrows debt from Genesis in exchange for a 10-year promissory note, effectively hiding the hole in Genesis's balance sheet. Genesis continued to accept new investor deposits and to prevent existing lenders from redeeming their assets until November 2022, when it abruptly suspended redemptions. Genesis subsequently filed for bankruptcy.
The Legal Violations
The complaint alleges violations of the federal securities laws, including:
- Unregistered securities offering in violation of Section 5 of the Securities Act of 1933, because the Genesis lending program constituted a security but was never registered or exempted from registration.
- Securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, through false and misleading statements about Genesis's financial condition made to induce new lenders and to prevent existing lenders from redeeming their assets.
- Control person liability under Section 15 of the Securities Act and Section 20 of the Exchange Act against DCG and Silbert for their direction and control of Genesis's conduct.
Who Is Affected
The proposed class includes individuals and entities who loaned digital assets to Genesis Global Capital pursuant to Master Digital Asset Loan Agreements between February 2, 2021, and November 16, 2022.
What Relief Is Being Sought
On behalf of the class, SGT seeks:
- Rescission of the lending agreements and return of investors' digital assets
- Compensatory damages
- Attorneys' fees and costs
- Other appropriate relief
CLASS DEFINITION
All individuals and entities who loaned digital assets to Genesis Global Capital, LLC pursuant to Master Digital Asset Loan Agreements from February 2, 2021, through November 16, 2022.
CASE UPDATES
February 24, 2026: Court Denies Motion to Dismiss
In a major victory for the plaintiffs, Judge Stefan Underhill denied DCG's motion to dismiss the case. The court found that plaintiffs have adequately pleaded violations of both the Securities Act of 1933 and the Securities Exchange Act of 1934.
April 25, 2023: SGT Appointed Co-Lead Counsel
SGT was appointed co-lead counsel in the consolidated class action, alongside co-counsel Kaplan Fox & Kilsheimer LLP.
January 23, 2023: Federal Class Action Filed
SGT filed a securities class action against DCG and Barry Silbert in the U.S. District Court for the District of Connecticut, alleging violations of the federal securities laws on behalf of individuals and entities who loaned digital assets to Genesis Global Capital. The case is McGreevy, et al. v. Digital Currency Group, et al., No. 23-cv-00082 (D. Conn.), pending before Hon. Stefan R. Underhill.
January 19, 2023: Amended Arbitration Demand Filed
SGT filed an Amended Demand for Class Arbitration with the American Arbitration Association on behalf of 19 clients — owed digital assets worth more than $2 million — who lent digital assets to Genesis and cannot get them back.
December 30, 2022: Class Arbitration Filed
SGT filed a class arbitration with the American Arbitration Association against DCG and Genesis on behalf of clients seeking the return of their digital assets. The case is Hagelstein v. Digital Currency Group, et al., AAA No. 01-22-0005-4467.
