Judge reinstates fraud claim against Barry Silbert and DCG

Judge Stefan Underhill’s latest order modifies an earlier February decision, clearing the path for federal securities claims and specific New York common law fraud allegations to move forward. While the court dismissed consumer protection claims tied to Illinois, Kansas, Nevada, and Texas, it stayed proceedings for those originating in California, Florida, and New York. This decision ensures that the core dispute over whether DCG misrepresented risk controls to Genesis Yield depositors remains an active legal battle.

Investors argue that the lending product was marketed as secure despite the defendants’ alleged knowledge of deep financial stress within Genesis. DCG has consistently rejected these accusations as baseless, maintaining its intent to defend against the litigation. The case adds to a complex web of legal challenges for the company, including a separate $1 billion suit filed by Genesis to recover alleged improper transfers. As the court prepares to examine these claims, the ruling serves as a reminder of the lingering fallout from the 2023 crypto contagion, which previously triggered a $2 billion settlement with the New York Attorney General and a $38.5 million SEC agreement involving former Genesis CEO Soichiro “Michael” Moro.