SELENDY GAY PLLC Philippe Z. Selendy Jennifer M. Selendy Kelley A. Cornish Maria Ginzburg Julie Singer Tony Russo 1290 Avenue of the Americas New York, NY 10104 Tel: 212-390-9000 Attorneys for Plaintiffs Genesis Global Capital, LLC and Genesis Asia Pacific Pte. Ltd. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: GENESIS GLOBAL HOLDCO, LLC, et al., 1 Wind-Down Debtors. Chapter 11 Case No. 23-10063 (SHL) Jointly Administered GENESIS GLOBAL CAPITAL, LLC, and GENESIS ASIA PACIFIC PTE. LTD, Plaintiffs, - against - DIGITAL CURRENCY GROUP, INC., BARRY SILBERT, DCG INTERNATIONAL INVESTMENTS LTD., HQ ENHANCED YIELD FUND LP (F/K/A HQ CASH MANAGEMENT FUND LP), GRAYSCALE OPERATING LLC (F/K/A GRAYSCALE INVESTMENTS LLC), FOUNDRY DIGITAL LLC (F/K/A DCG FOUNDRY LLC), GENESIS GLOBAL TRADING, INC., LUNO AUSTRALIA PTY LTD, DUCERA LLC, MICHAEL KRAMER, ALAN SILBERT, and INX LIMITED, Defendants. Adv. Pro. No. 25-_____(SHL) 1 The Wind-Down Debtors in the above-captioned chapter 11 cases, along with the last four digits of each Wind- Down Debtor’s tax identification number (or equivalent identifier), are: Genesis Global Holdco, LLC (8219); Genesis Global Capital, LLC (8564); and Genesis Asia Pacific Pte. Ltd. (2164R). For the purpose of these Chapter 11 Cases, the service address for the Wind-Down Debtors is 175 Greenwich Street, Floor 38, New York, NY 10007. 23-10063-shl Doc 2153 Filed 05/19/25 Entered 05/19/25 14:43:00 Main Document Pg 1 of 65 ADVERSARY COMPLAINT Plaintiffs Genesis Global Capital, LLC (“Genesis Capital”) and Genesis Asia Pacific Pte. Ltd. (“Genesis AP”, and together with Genesis Capital, “Plaintiffs” or “Genesis”), through their undersigned counsel, bring this complaint (the “Complaint”) against Digital Currency Group, Inc. (“DCG”), Barry Silbert (“B. Silbert”), DCG International Investments Ltd. (“DCGI”), HQ Enhanced Yield Fund LP (f/k/a HQ Cash Management Fund LP) (“HQ”), Grayscale Operating LLC (f/k/a Grayscale Investments LLC) (“Grayscale”), Foundry Digital LLC (f/k/a DCG Foundry LLC) (“Foundry”), Genesis Global Trading, Inc. (“Genesis Trading”), Luno Australia Pty Ltd. (“Luno AU”), Ducera LLC (“Ducera”), Michael Kramer (“Kramer”), Alan Silbert (“A. Silbert”), and INX Limited (“INX,” and together with DCG, B. Silbert, DCGI, HQ, Grayscale, Foundry, Genesis Trading, Luno AU, Kramer, Ducera, and A. Silbert, the “Insider Defendants,” and each individually an “Insider Defendant”) and allege the following based upon personal knowledge as to themselves and their own acts, and upon information and belief based on reasonable due diligence of Plaintiffs’ books and records, Plaintiffs’ ongoing investigation, and the documents and information presently available to Plaintiffs as to all other matters: NATURE OF THE ACTION 1. Plaintiffs bring this action to avoid and recover “in kind” preferential and fraudulent transfers of cryptocurrency and U.S. Dollars (“USD”) now worth more than one billion dollars. These transfers were made to Genesis’s parent company, DCG, its founder and CEO, Barry Silbert, and various DCG affiliates and other insiders in the year leading up to Plaintiffs’ chapter 11 filings, all while Genesis was insolvent. These Insider Defendants typically initiated their transfers around watershed events in the cryptocurrency industry—including the collapse of Terra-Luna in May 2022, the collapse of Three Arrows Capital, Ltd. (“3AC”) the following month, and the collapse 23-10063-shl Doc 2153 Filed 05/19/25 Entered 05/19/25 14:43:00 Main Document Pg 2 of 65 2 of FTX Trading Ltd. (“FTX”) in November 2022—when the Insider Defendants knew through their close relationship with Genesis that its business was on the brink of collapse. As these events unfolded, DCG and Barry Silbert worked to fend off a run on the bank at Genesis, falsely assuring Genesis’s customers that the business was “strong” and had a “ton of liquidity.” While the Insider Defendants withdrew their assets and recovered 100% on USD and cryptocurrency loans from Genesis’s crippled platform, the public was kept in the dark, and Genesis’s customers did not likewise call their loans from Genesis before it suspended all withdrawals in November 2022 and crashed into bankruptcy in January 2023. 2. Barry Silbert created DCG and positioned it to profit from every facet of the cryptocurrency industry. His DCG conglomerate was comprised of affiliates whose businesses spanned the space, including crypto mining, cryptocurrency exchange, wealth management, and digital asset management companies. Barry Silbert created Genesis Capital in 2017 (with Genesis AP to follow in 2020) to operate as DCG’s banking arm: Genesis borrowed cryptocurrency and/or USD from institutional counterparties or high-net-worth individuals in exchange for paying them fixed rates of interest on their balances. Then Genesis profited by loaning those assets to other counterparties for higher rates of fixed interest. By design, the DCG conglomerate, including Genesis, had integrated operations, shared personnel, and significant inter-organizational loans to and from Genesis. 3. By the end of 2021, Genesis had $14 billion of loans outstanding. It faced extraordinary systemic risk and had virtually no internal controls to mitigate that risk: Genesis extended loans to a concentrated and correlated group of counterparties all in the cryptocurrency industry, failed to effectively diligence those counterparties, accepted insufficient and volatile cryptocurrency collateral for loans, maintained almost non-existent loan reserves, and grossly 23-10063-shl Doc 2153 Filed 05/19/25 Entered 05/19/25 14:43:00 Main Document Pg 3 of 65 3 overstated the value of its assets and equity on its books. An outsized portion of loans to Genesis were open term and callable by lenders on demand, making Genesis particularly susceptible to a bank run should any one of these risks be exposed. In November 2021, outside consultant Oliver Wyman informed DCG and other insiders that Genesis faced serious risks that were unsustainable, but nothing was done to address those risks. As a result of all this, Genesis was insolvent by no later than December 31, 2021. 4. The cryptocurrency industry historically was volatile. Over the course of 2022, the structural risks at Genesis were exacerbated by a major downturn in this industry, leading to a series of collapses at counterparties and driving Genesis even deeper into insolvency. In early 2022, cryptocurrency prices steadily declined, then dropped more precipitously in late March. In April, Oliver Wyman warned DCG of a potential “market crash.” In May, the first major cryptocurrency collapse occurred: the prices of both the TerraUSD “stablecoin” and LUNA “support” coin on the Terra-Luna ecosystem were wiped out, and the Terra-Luna developer halted activity on the blockchain. This collapse strained other crypto companies, causing a cascading effect as crypto holders pulled funds from other crypto exchanges. In June, cryptocurrency hedge fund 3AC’s fate followed Terra-Luna’s: 3AC defaulted on its loans from Genesis AP and commenced a liquidation proceeding. The 3AC loan was significantly undercollateralized, leaving a $1.1 billion “structural hole” in Genesis’s balance sheet that was never filled. 5. DCG recognized the existential threat to Genesis and, with it, to DCG and the Insider Defendants that had loaned Genesis hundreds of millions of dollars. Thus, DCG initiated a campaign of misinformation to Genesis’s customers, claiming that all was well at Genesis because DCG had issued to Genesis Capital a promissory note with a face-value amount of $1.1 billion. But that note had an undisclosed catch: it did not provide Genesis with any liquidity; 23-10063-shl Doc 2153 Filed 05/19/25 Entered 05/19/25 14:43:00 Main Document Pg 4 of 65 4 rather, it was payable only in 10 years and carried a de minimis 1% coupon. It was worth only a small fraction of the $1.1 billion Genesis reported on its balance sheet, leaving the “structural hole” unfilled. And in exchange for this sham note, Genesis signed away the value of its recoveries from the 3AC bankruptcy to DCG. In November, following publication of an article exposing structural defects in Alameda Research Ltd. (“Alameda”) and FTX’s capital and risk management, there was a sell-off of FTX’s proprietary cryptocurrency and a bank run on FTX, leading FTX to file for bankruptcy along with its subsidiary Alameda. 6. At each critical moment, DCG and Genesis falsely assured its customers that Genesis was financially stable with adequate liquidity, while the Insider Defendants—who knew the truth—simultaneously called over a billion dollars’ worth of loans to Genesis. 7. After Oliver Wyman warned of a market crash in April, Barry Silbert, along with DCG and its subsidiary DCGI, collectively pulled $129 million in loans out of Genesis Capital. In the wake of the Terra-Luna crash in May, DCG called $154 million in USD loans from Genesis Capital, while Genesis posted a carefully worded Tweet reassuring creditors that Genesis had “no direct exposure to UST and LUNA,” a “strong balance sheet,” and “ton[s] of liquidity.” Within two weeks of the 3AC collapse in June, while Barry Sibert and DCG were bracing themselves for a bank run but directing Genesis to “continue to show the market that [Genesis is] lending,” Insider Defendants called loans worth no less than $128 million. In April and June, DCG caused Genesis Capital to transfer to it tens of millions of dollars as supposed “tax payments,” even though Genesis Capital had no tax obligations and received no consideration in return—these payments were really naked dividends. And in November, when FTX and Alameda collapsed and filed for bankruptcy, within two weeks, Insider Defendants called loans worth no less than $122 million. 23-10063-shl Doc 2153 Filed 05/19/25 Entered 05/19/25 14:43:00 Main Document Pg 5 of 65 5 8. Even then, at the direction of DCG and Barry Silbert, Genesis posted on Twitter that it had “no material exposure” to FTX. In truth, Genesis Capital had millions in loans extended to Alameda, and the FTX collapse left Genesis Capital with an additional $36.8 million hole in its balance sheet. The next day, a revised statement went out admitting that Genesis had approximately $175 million in funds “locked” with FTX. Genesis could no longer repay the loans that its customers were calling, so it suspended customer withdrawals and stopped all lending and borrowing activities on November 16, 2022—but not before DCG could pull its last, $50 million loan to Genesis on November 15. Plaintiffs filed for bankruptcy on January 19, 2023 (the “Petition Date”), alongside their parent company, Genesis Global Holdco, LLC (“Genesis Holdco,” and together with Plaintiffs, the “Debtors”). 9. Plaintiffs bring this adversary proceeding (the “Adversary Proceeding”) pursuant to Rule 7001 of the Federal Rules of Bankruptcy Procedure; Sections 502(d), 544(b), 547(b), 548(a), and 550(a) of Title 11 of the United States Code (the “Bankruptcy Code”); and Sections 274 and 276 of the N.Y. Debtor & Creditor Law § 270 et seq. (the “N.Y. DCL”), to seek disgorgement in-kind of cryptocurrency and USD which the Insider Defendants pulled from Genesis Capital or Genesis AP in the one-year period prior to the Petition Date—January 19, 2022 through January 19, 2023 (the “Preference Period”). These transfers, made while Genesis was insolvent and the public was kept in the dark by insiders, are today worth over $1.2 billion. JURISDICTION AND VENUE 10. The United States Bankruptcy Court for the Southern District of New York (the “Court”) has jurisdiction over this Adversary Proceeding pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the Southern District of New York, dated January 31, 2012 (Preska, C. J.). 23-10063-shl Doc 2153 Filed 05/19/25 Entered 05/19/25 14:43:00 Main Document Pg 6 of 65 6 11. This Adversary Proceeding brings claims under the Bankruptcy Code to recover preferences and fraudulent transfers. Accordingly, all claims are core pursuant to 28 U.S.C. § 157(b) and arise under Genesis Capital’s chapter 11 case filed with the Court on January 19, 2023, In re Genesis Global Capital, LLC, No. 23-10064 (SHL), and Genesis AP’s chapter 11 case filed with the Court on January 19, 2023, In re Genesis Asia Pacific Pte. Ltd., No. 23-10065 (SHL), both of which are jointly administered under In re Genesis Global Holdco, LLC, No. 23-10063 (SHL) (the “Chapter 11 Case,” and together with the chapter 11 cases of Genesis Capital and Genesis AP, the “Chapter 11 Cases”). 12. Jurisdiction is also appropriate as this Court’s Findings of Fact, Conclusions of Law, and Order Confirming the Debtors’ Amended Joint Chapter 11 Plan and Granting Relief (the “Confirmation Order”), ECF No. 1736, in the Chapter 11 Cases, approved the Genesis Debtors’ chapter 11 plan ( ECF No. 1712 (as amended on July 21, 2024 at ECF No. 1874, the “Plan”)), which, at Article XI (11), provides that this Court “retain[s] jurisdiction” and may “adjudicate all matters, arising out of ... the Chapter 11 Cases.” 13. Venue is proper in this Court pursuant to 28 U.S.C. § 1409 because this Adversary Proceeding arises under the Chapter 11 Case filed in this District, and venue in this Court is consistent with the interests of justice, judicial economy, and fairness. 14. The claims in this Complaint are timely filed pursuant to 11 U.S.C. § 546(a) and tolling agreements executed between Genesis and the Insider Defendants. 15. Pursuant to Rule 7004(f) of the Federal Rules of Bankruptcy Procedure, this Court has jurisdiction over all the Insider Defendants, who have purposefully availed themselves of U.S. jurisdiction through, among other things, knowingly causing funds to be transferred to, or receiving funds from, Plaintiffs in the U.S. and/or U.S. banking institutions on behalf of Plaintiffs, 23-10063-shl Doc 2153 Filed 05/19/25 Entered 05/19/25 14:43:00 Main Document Pg 7 of 65 7 and otherwise interacting with individuals based in the U.S. in connection with the alleged misconduct at issue in this Complaint. All of the Insider Defendants further entered into agreements with a New York choice of forum and choice of law clause in connection with the alleged misconduct at issue in this Complaint. In addition, Insider Defendants DCG, B. Silbert, DCGI, Grayscale, Foundry, Genesis Trading, Kramer, and Ducera each filed a proof of claim in the Chapter 11 Cases. 16. Plaintiffs consent to entry of final orders and judgments by this Court in this Adversary Proceeding. Plaintiffs also consent to entry of final orders or judgments by this Court if it is determined that this Court, absent consent of the parties, cannot enter final orders or judgments consistent with Article III of the United States Constitution. 17. Plaintiffs submit, without limitation, that the Court may enter a final order or judgment on its claims against Insider Defendants DCGI, Foundry, Grayscale, Genesis Trading, Kramer, and Ducera, because each filed a proof of claim in the Chapter 11 Cases. PARTIES 18. Plaintiff Genesis Global Capital, LLC is a cryptocurrency borrowing and lending company. It is an affiliate of Genesis Asia Pacific Pte Ltd. Genesis Capital, LLC is a debtor in the Chapter 11 Cases. During the relevant period, its principal place of business was New York, New York. 19. Plaintiff Genesis Asia Pacific Pte. Ltd. is an affiliate of Genesis Capital and a cryptocurrency borrowing and lending company. It primarily loaned assets transferred from Genesis Capital to cryptocurrency borrowers based in Asia. Genesis Asia Pacific Pte. Ltd. is a debtor in the Chapter 11 Cases. During the relevant period, it operated out of New York, New York and Singapore. 23-10063-shl Doc 2153 Filed 05/19/25 Entered 05/19/25 14:43:00 Main Document Pg 8 of 65 8 20. Insider Defendant Digital Currency Group, Inc. is a corporation organized under the laws of Delaware that invests in and operates companies within the cryptocurrency industry. DCG wholly owns Genesis Global Holdco, LLC, which wholly owns Plaintiffs, making DCG the ultimate parent of Plaintiffs. A chart of DCG, its affiliates, and related parties is annexed hereto as Exhibit A. 21. Insider Defendant Barry Silbert is the founder, CEO, chair of the board of directors, and controlling shareholder of DCG. B. Silbert is a resident of New York and the ultimate beneficial owner of Plaintiffs. 22. Insider Defendant DCG International Investments Ltd. is a corporation organized under the laws of Bermuda that engages in venture capital investing in the cryptocurrency market. DCGI is a direct, wholly owned subsidiary of DCG and is an affiliate of Plaintiffs. 23. Insider Defendant HQ Enhanced Yield Fund LP (f/k/a HQ Cash Management Fund LP) is a general limited partnership organized under Delaware law that manages investments. HQ is an indirect subsidiary of DCG and is an affiliate of Plaintiffs. 24. Insider Defendant Grayscale Operating LLC (f/k/a Grayscale Investments LLC) is a limited liability company organized under the laws of Delaware that engages in cryptocurrency and investment management. Grayscale is a direct, wholly owned subsidiary of DCG and is an affiliate of Plaintiffs. 25. Insider Defendant Foundry Digital LLC (f/k/a DCG Foundry LLC) is a limited liability company organized under the laws of Delaware that engages in cryptocurrency generation activities, such as Bitcoin “mining.” Foundry is a direct, wholly owned subsidiary of DCG and is an affiliate of Plaintiffs. 23-10063-shl Doc 2153 Filed 05/19/25 Entered 05/19/25 14:43:00 Main Document Pg 9 of 65 9 26. Insider Defendant Genesis Global Trading, Inc. is a corporation incorporated in Delaware that engaged in cryptocurrency financial operations. Genesis Trading is a wholly owned subsidiary of DCG and an affiliate of Plaintiffs. Genesis Trading ceased operations in 2023 but has not yet wound-up and is a company capable of being sued pursuant to 8 Del. C. § 278. 27. Insider Defendant Luno Australia Pty Ltd. is a company organized under the laws of Australia that provides cryptocurrency wallet and exchange services. Luno AU is indirectly owned by DCG and is an affiliate of Plaintiffs. Pursuant to corporate restructuring of Luno AU and a “Deed of Assignment” dated October 4, 2022 (the “Luno Assignment Agreement”), Luno AU assumed the “right, title benefit, privileges and interest in” the Genesis loan portfolio of an affiliated entity, Luno Pte. Ltd. (“Luno SG”), 2 which prior to that date had extended loans to, and received transfers from, Genesis AP pursuant to a master loan agreement between Genesis AP and Luno SG dated July 29, 2020 (the “Luno SG MLA”). The existing loan portfolio was simultaneously “assigned, transferred and conveyed” from Genesis AP to Genesis Capital, to be governed by a “Master Digital Asset Loan Agreement,” dated August 29, 2022, between Luno AU and Genesis Capital. Under the Luno Assignment Agreement, Luno AU assumed all “burdens, obligations [or] liabilities in connection with” Luno SG’s loan portfolio, defined as “a number of individual loans with Genesis [AP], each evidenced by a loan term sheet governed by the terms and conditions of” the prior Luno SG MLA, “including any outstanding loans.” Luno AU employees worked closely with Genesis Capital employees in New York to transfer its account and business to Genesis Capital in New York. 28. Insider Defendant Ducera LLC is a limited liability company organized under the laws of Delaware that provides financial advisory services with a focus on restructuring and 2 Like Luno AU, Luno SG is indirectly owned by DCG and is an affiliate of Plaintiffs. 23-10063-shl Doc 2153 Filed 05/19/25 Entered 05/19/25 14:43:00 Main Document Pg 10 of 65 10 investment banking. Ducera has served as DCG’s financial advisor prior to, during, and after the Preference