Catenaa, Wednesday, October 08, 2025-Legal challenges stemming from Genesis Global Capital’s bankruptcy are casting uncertainty over Grayscale’s planned $33 billion initial public offering, according to the Financial Times.
Digital Currency Group (DCG) founder Barry Silbert is leading the IPO effort, which would mark the first major public listing by a crypto asset manager.
The Genesis Litigation Oversight Committee (LOC) has filed lawsuits in Delaware and New York seeking over $1.2 billion in alleged misappropriated funds.
The suits accuse DCG and Silbert of treating Genesis as a “treasury,” misusing creditor assets, and manipulating disclosures. DCG and Silbert argue they acted in good faith during a market-wide crypto crash.
The legal disputes stem from Genesis’s exposure to Three Arrows Capital, which defaulted on $2.36 billion in loans in 2022. DCG stepped in with a $1.1 billion promissory note, which has since become central to ongoing court battles.
Genesis is seeking $2.2 billion in digital assets and additional claims for fraudulent transfers, while DCG is pursuing recovery of $106 million mistakenly paid after the note was void.
Regulatory scrutiny adds to the pressure. The SEC fined DCG $38 million and former Genesis CEO Michael Moro $500,000 for misleading investors, revealing executives knew of over $1 billion in losses while presenting the firm as solvent.
Other parties, including the FTX Recovery Trust, have filed related suits totaling $1.15 billion.
Despite the mounting legal and regulatory challenges, Grayscale continues to advance its IPO plans, having confidentially submitted documents to the SEC in June.
Observers note underwriters and regulators will closely evaluate DCG’s financial entanglements with Genesis before approving any public offering.
