Federal Judge Reinstates New York Fraud Claim Against Barry Silbert and DCG in Genesis Yield Case

A U.S. federal judge has reinstated a New York common-law fraud claim against Barry Silbert, Digital Currency Group (DCG) and other defendants in litigation stemming from the failed Genesis Yield program, reopening one piece of a broader, post-collapse court fight. Judge Stefan Underhill of the U.S. District Court for the District of Connecticut revised a February order and agreed to revisit certain state-law claims after plaintiffs argued that the Class Action Fairness Act (CAFA) provides federal jurisdiction. The result: the New York fraud claim is back in the case. The court’s earlier decision allowing federal securities claims to proceed remains in place. Several state consumer-protection claims were dismissed, including those brought under the laws of Illinois, Kansas, Nevada and Texas. Other consumer-protection claims were stayed, including California, Florida and New York. The revived New York fraud claim lets investors pursue allegations that Silbert, DCG and others misled customers about Genesis' financial health and risk controls before the crypto lender froze withdrawals and filed for bankruptcy in early 2023. Plaintiffs argue Genesis Yield—marketed as a way to deposit crypto and earn interest—was portrayed as safer than it was, even as Genesis allegedly faced mounting financial stress. The decision lands amid continuing litigation around Genesis. In 2025, Genesis filed separate lawsuits against DCG, Silbert and other insiders seeking to recover more than $1 billion in what it describes as improper transfers. Genesis entered bankruptcy after the collapses of Three Arrows Capital and FTX intensified pressure on crypto lenders. A bankruptcy judge approved a 2024 plan enabling Genesis to distribute billions of dollars in cash and crypto to creditors, rejecting a challenge by DCG. Genesis also reached a $2 billion settlement with the New York Attorney General that established a victims' fund for creditors. DCG later settled with the SEC. DCG and former Genesis CEO Soichiro "Michael" Moro agreed to pay $38.5 million to resolve allegations they misled investors about Genesis' finances, without admitting or denying the regulator's findings. DCG has previously described the allegations as "baseless" and said it will defend itself. The latest ruling does not determine the merits of the claims; it allows the New York fraud claim and the federal securities claims to move forward while other state consumer claims remain dismissed or on hold.