> ## Content Index > Fetch the complete content index at: https://www.metatalks.ai/llms.txt > Use this file to discover other available public pages before exploring further. # DCG’s House of Cards: Legal Troubles that May Spiral into Criminal Case - URL: https://www.metatalks.ai/dcgs-house-of-cards-legal-troubles-that-may-spiral-into-criminal-case/ - Published: 2023-11-08T11:51:10.000Z - Updated: 2023-11-09T13:07:07.000Z - Author: Katelyn Chow - Tags: barrysilbert, dcg, ftx, bitcoin, btc, crypto, cryptocurrency, regulation, lawsuit Barry Silbert’s [Digital Currency Group](https://twitter.com/DCGco?ref=metatalks.ai) (DCG) is facing legal issues that [may turn](https://twitter.com/real%5Fvijay/status/1721385528510251182?ref=metatalks.ai) into a criminal case with “fraud much more important than SBF’s embezzlement.” [Vijay Boyapati](https://twitter.com/real%5Fvijay?ref=metatalks.ai) has brought to light the precarious position of DCG through a comprehensive [thread](https://twitter.com/real%5Fvijay/status/1721385528510251182?ref=metatalks.ai). ![](https://lh7-us.googleusercontent.com/NPP95q4nkEQbuJpGcRRcCUf_fE8RFSU4Cju6BQ08FNmjL0BaismumveBNe6TTwxJ--RxSYJfuNKEgMUzTzmn_Feg7xLXEJJRI5elM_nUcprznz3tdFeP6rJCafbDmAKkKyd3rMRxQQ8qLwHzkQvK9erhuch2MhSq) ([Thread](https://twitter.com/real%5Fvijay/status/1721385528510251182?ref=metatalks.ai)) According to [@Real\_Vijay](https://twitter.com/real%5Fvijay?ref=metatalks.ai), a fraud more complex and larger scale than the FTX embezzlement unfolded in 2022, yet it has flown under the radar of mainstream media. In his [thread](https://twitter.com/real%5Fvijay/status/1721385528510251182?ref=metatalks.ai), Boyapati describes an arbitrage scheme that capitalized on the [Grayscale Bitcoin Trust (GBTC) premium](https://www.metatalks.ai/how-gbtcs-possible-breakout-might-be-setting-the-stage-for-a-bitcoin-bull-run/) over the years, involving key industry players from [Three Arrows Capital](https://www.wikiwand.com/en/Three%5FArrows%5FCapital?ref=metatalks.ai) to [BlockFi](https://www.wikiwand.com/en/BlockFi?ref=metatalks.ai). This scheme was further used to inflate the value of NFTs and altcoins. ![](https://lh7-us.googleusercontent.com/SlvUzIxTYKKZ-OAchXrtSXsFFF3iOpNExe-sBu_T1KyL3zuF1hFmba7shnYK3qbjfMJSzqgmtIQiaofQTglKhVif-Y9WtH2rRrAdEIMDFiShCCOWgqPlZaw87gWTTZAL5dUBE8FeRGJYZsqhHOTkGCTHQLPUMB8Y) ([Thread](https://twitter.com/real%5Fvijay/status/1721385539235185039?ref=metatalks.ai)) Genesis, a top Bitcoin lender and DCG subsidiary, played a central role in facilitating these trades. When Three Arrows Capital [collapsed](https://www.cnbc.com/2022/07/11/how-the-fall-of-three-arrows-or-3ac-dragged-down-crypto-investors.html?ref=metatalks.ai), it left Genesis with a massive [$2 billion deficit](https://www.cnbc.com/2022/11/23/dcgs-barry-silbert-writes-letter-to-investors-after-ftx-collapse.html?ref=metatalks.ai). To avert immediate bankruptcy, DCG provided Genesis with a questionable loan, merely postponing the crisis. This stopgap measure only delayed the inevitable, and the crisis eventually impacted DCG itself, which was also involved in the GBTC trade. ![](https://lh7-us.googleusercontent.com/czA91mrXbMLWp8_qdsyL5cQ9PuOvzgaY1Zbx01fRRbv0pg56-VRVrgapmxIg2PafkkUhJd5ESotwjcIEU5E_i3tIUHejmor2pSZC8nONAKcpq54SITPZvr2foGQQQ0Y_R1A6mlgP79kvQR7Z83FMD9vb2FGusCJv) ([Thread](https://twitter.com/real%5Fvijay/status/1721385544230572183?ref=metatalks.ai)) Boyapati has accused DCG and its CEO, [Barry Silbert](https://twitter.com/BarrySilbert?ref=metatalks.ai), of misrepresenting the solvency of Genesis to creditors months before its bankruptcy declaration in the wake of the FTX collapse. ![](https://lh7-us.googleusercontent.com/Pu9pgHBl8QhdNe-uIyuLGwNpZolWKLJCjlIj3l8B5JyBq20f-DA9hWlRuvxiwR713mxxViLJ4ULclTXWIk7eViaRtHfwTkJEl1C7cRGMHuKj-4HoswiSF3PhJljEtFTHGgkpzBsv8D7TqJfbctC0e_b1pyGoUkxO) ([Thread](https://twitter.com/ramahluwalia/status/1716218498341597430?ref=metatalks.ai)) From this perspective, Genesis had been insolvent since June 2022 after the Terra/Luna ecosystem collapse, which resulted in a $1.2 billion hole in its balance sheet. It was reported that DCG absorbed this $1.2 billion debt with a ‘promissory note’ to clear Genesis of any liabilities related to Three Arrows Capital. Yet, this promissory note allegedly has been part of a scheme to demonstrate Genesis’ solvency falsely. ![](https://lh7-us.googleusercontent.com/m6mdNJpERT6YkUCmOeKYH4KepoP2yAQ546wmgP6hjgbWupKsj9ppudwIb_WrVFo9wfX83T5LmqS3WqYbI3CYTmEQSc0QZiObryx49125AJyNw6OqDiFPvm2f7ap6Xmbj40g2mZpRDNRhtBtOg9gSz1-etJpbZRsW) ([Thread](https://twitter.com/real%5Fvijay/status/1721385571032142032?ref=metatalks.ai)) DCG seemingly had a strong incentive to maintain this facade for months, considering their massive loan of 18,697 BTC from Genesis, which would become payable by DCG if Genesis were to declare bankruptcy at that point. ![](https://lh7-us.googleusercontent.com/ziLJ00TjNG_XjgXKVRB1EGNRlaZUQIvhEBBB809fQ7Jef8tardRwnG16tZDa7xAgQ7kGEAP-qjsoCQVa7nB1iYbOtl8Cyo4wr4MGyfOPe5cedb6jiPRnLUYIR0sTUMKmjjk98WCLc_iYWyB5NJosrDVp-bq_rh0u) ([Thread](https://twitter.com/real%5Fvijay/status/1721386014210732431?ref=metatalks.ai)) The New York Attorney General has since [filed](https://www.reuters.com/legal/ny-attorney-general-sues-crypto-firms-gemini-genesis-2023-10-19/?ref=metatalks.ai) a $1 billion civil lawsuit against Genesis, DCG, and executives [Barry Silbert](https://twitter.com/BarrySilbert?ref=metatalks.ai) and [Michael Moro](https://twitter.com/michaelmoro?ref=metatalks.ai). If proven, the allegations could lead to a criminal case, drawing parallels with the FTX scandal. ![](https://lh7-us.googleusercontent.com/sxYWg4-1jXdX6dRbsJk4baP8uJ5AwA4KxI9mUXc80D3kblBpr6xVYU3EInZkEswOpNMPTIDGeo1rViSC-aNL4yjeoTFyMg0XM7K5DQQya9kK00oJOWnQVrplx3jzpOA7n7Gn06BYi5jGSAuXmbriCvEKdXpt0a-V) ([Thread](https://twitter.com/real%5Fvijay/status/1721386233623187552?ref=metatalks.ai)) ![](https://lh7-us.googleusercontent.com/N2Pi7YFVLdwGUMDPMLmxGw1jn7QfDw-o4sYMTv90RCkHm6R7cvHsdsohxeJthQcHqEW4eER_GzDO_Ucw5mFAbNl_pVX7hbWOV9YoDRaliyA00fOh88fNg3spZ6jn1N31Jih3pujhf_dy0dwhxvsBpTh9wYqCd0u-) Barry Silbert and DGC, for their part, [refute](https://twitter.com/DCGco/status/1715048570749845754?ref=metatalks.ai) the allegations completely and intend to fight these claims in court, [retaining](https://twitter.com/DCGco/status/1719691022857654709?ref=metatalks.ai) “one of the leading trial attorneys in the United States.” ![](https://lh7-us.googleusercontent.com/8gPzWTTBTbdXmKkWGM2BcmSUnAqBjr7X_swEzRMQkhokXJZFvv56vynSAxHIgmz2tt6Wiz6SvZ3lDj-YJJDIdR6O_smxi_s4-H5mdlu6q7GBA69jGQMwFTgEzGDBNmOUlm3uckfls04DiW0o6c83lEmrH5BfpKRI) ![](https://lh7-us.googleusercontent.com/6FkpqR84KpWgMlr6sgnGFegNBAZkDixg3Se5DlZJnV3RvzlC5ahHM8gFmL55-CDvtApvDL7Tdprv3cRp97NHdH41N3jv3FFzItUnb9tg-vBy01F10uAStQPK4z6rnT-7hH6iUGchsV7LjdMF4BsvTP9gap3SuoTy)