A recently unsealed legal complaint alleges that Digital Currency Group (DCG) executives disregarded repeated risk warnings while mismanaging subsidiary Genesis’s escalating debt crisis, resulting in significant governance failures and public deception.
Internal documents cited in the complaint indicate DCG leadership was aware of mounting financial and legal risks at Genesis but permitted its operations to expand from $4 billion to $12 billion without implementing adequate oversight mechanisms.
The filing describes DCG as ‘flying blind’ during the crisis, highlighting delayed or insufficient responses to third-party risk assessments that exacerbated financial vulnerabilities within the cryptocurrency lender.
According to the complaint, DCG fostered a ‘culture of submission’ characterized by compromised ethical standards and flawed decision-making processes that prioritized expansion over risk management.
Executives from both DCG and Genesis are accused of publicly concealing the severity of the company’s insolvency through misleading statements, thereby deceiving stakeholders about the true financial condition.
Genesis is now pursuing legal recovery exceeding $3.3 billion from DCG and its leadership, underscoring the profound financial and legal consequences of the alleged mismanagement.