Grayscale’s planned $33 billion initial public offering, a landmark event for the crypto industry, is facing a serious threat from a complex web of lawsuits stemming from the bankruptcy of its corporate sibling, Genesis Global Capital.
The Legal Quagmire Threatening the IPO
The core of the problem lies in two major lawsuits filed in May 2025 by the Genesis Litigation Oversight Committee, representing the bankrupt estate’s creditors. The allegations are severe and, if proven, paint a picture of corporate misconduct that could spook regulators and investors essential for a successful public offering.
One complaint, filed in Delaware’s Court of Chancery, accuses DCG and its CEO, Barry Silbert, of treating Genesis as a “treasury” for their own use, “recklessly operating, exploiting, and bankrupting” the company. It alleges they concealed Genesis’s insolvency while extracting value, misleading creditors about the firm’s financial health to keep funds flowing in.
Simultaneously, a lawsuit in a New York bankruptcy court seeks to claw back more than $1.2 billion in transfers made to DCG and other insiders before Genesis’s collapse. The committee argues these transfers were improper, pointing to payments under a “tax sharing agreement” that allegedly never existed.
This legal turmoil is compounded by regulatory action. In January 2025, the SEC fined DCG $38 million for misleading investors about Genesis’s financial stability following the collapse of the hedge fund Three Arrows Capital. Court filings revealed that DCG executives were aware of over $1 billion in Genesis losses while publicly presenting the business as solvent.
A Tangled Corporate and Legal Web
The legal disputes create a direct and tangible cloud over Grayscale’s IPO ambitions. Industry observers note that underwriters and regulators are certain to scrutinize DCG’s financial entanglements with Genesis and its disclosures to investors before approving the public listing. The allegations of fraud and financial misrepresentation make this scrutiny even more intense.
Despite these challenges, Grayscale is proceeding, having confidentially submitted draft IPO documents to the SEC in June 2025. Complicating matters, Barry Silbert, who is at the center of the lawsuits, has recently reaffirmed his role by rejoining Grayscale’s board as chairman. This move inextricably links the legal fortunes of DCG and Genesis with the public perception of Grayscale.
The situation is a classic case of ambition clashing with accountability. While Grayscale’s IPO has the potential to be a historic moment for crypto asset management, the unresolved lawsuits from the Genesis bankruptcy represent a critical vulnerability. The path forward for Grayscale now depends on its ability to navigate this legal minefield and convince the market that its future is separate from the alleged failures of its parent company’s past.
