Federal Judge Allows Silver Golub & Teitell Cryptocurrency Class Action Against DCG to Proceed

February 25, 2026

A federal judge has denied Digital Currency Group's motion to dismiss a proposed securities class action accusing it of hiding an impending $1.1 billion insolvency at its Genesis Global Capital subsidiary from investors. The ruling allows the investors to move forward with their case against DCG, its founder and CEO, Barry Silbert, and several other DCG and Genesis executives.

The plaintiffs are owners of digital assets who invested their digital assets with Genesis in exchange for interest payments. The lawsuit alleges that DCG misleadingly portrayed Genesis as solvent even while Three Arrows Capital, which held 30 percent of Genesis’ total loan book, declared bankruptcy in June 2022. DCG and Silbert directed Genesis to sell the uncollectable Three Arrows debt to DCG in return for a 10-year promissory note, effectively hiding the impairment, the lawsuit alleges. Genesis stopped honoring redemption requests in November 2022, in the wake of the collapse of digital asset trading platform FTX, and subsequently filed for bankruptcy.

SGT filed the first private class action against the defendants in January 2023 and was appointed co-lead counsel with co-counsel Kaplan Fox the following April. SGT’s lawsuit was followed by a civil enforcement action filed by New York Attorney General Letitia James against DCG, Genesis and others, and in May 2025 the Genesis bankruptcy estate filed suits in Delaware and New York federal court seeking more than $3.2 billion from DCG, Silbert and affiliated insiders.

In his order on February 24, Judge Stefan Underhill in the U.S. District Court for the District of Connecticut found that the plaintiffs have adequately pleaded violations of both the Securities Act of 1933 and the Securities Exchange Act of 1934. Acknowledging that cryptocurrency is "a modern industry that has evolved unpredictably and rapidly," the court applied the U.S. Supreme Court's 1946 Howey test and its 1990 Reves test to find that the Genesis program constituted a security, rejecting DCG's argument that the program was merely a "run-of-the-mill loan."

The ruling also lifted the PSLRA discovery stay, allowing plaintiffs to begin obtaining evidence.

The court dismissed without prejudice state consumer protection and common law fraud claims, finding that they overlapped with the federal securities claims and could delay the litigation.

Bloomberg Law and Law360 both reported on the judge's ruling.

The case is McGreevy v. Digital Currency Group.

Partner Ian Sloss represents the plaintiffs, alongside co-counsel Kaplan Fox & Kilsheimer LLP.

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