Judge Revives New York Fraud Claim Against DCG and Barry Silbert in Genesis Yield Lawsuit

A federal judge in Connecticut has revived a New York common-law fraud claim against Digital Currency Group and its founder, Barry Silbert, in the Genesis Yield investor lawsuit, leaving them to face that claim alongside federal securities claims that were already allowed to move forward.

In a July 2 order in McGreevy et al. v. Digital Currency Group, Inc., et al., U.S. District Judge Stefan R. Underhill granted the plaintiffs’ motion to revise an earlier ruling and denied the defendants’ motion to dismiss the New York fraud claim. “I deny the defendants’ motion to dismiss the common law fraud claim,” Underhill wrote. The same order dismissed consumer-protection claims under Illinois, Kansas and Nevada law, and stayed consumer-protection claims under California, Florida and New York law pending further order. The ruling came at the motion-to-dismiss stage, meaning the court did not find that DCG or Silbert committed fraud or violated securities laws, only that the claims were sufficiently pleaded to continue.

In a separate order issued the same day, Underhill certified for interlocutory appeal — a request for early appellate review before a case is finished — his Feb. 24 ruling on whether the Genesis Yield program was a security under federal law. “For the above-mentioned reasons, I grant the defendants’ motion to certify my February 24, 2026 order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b),” he wrote. Certification does not itself start an appeal. The defendants may now ask the 2nd U.S. Circuit Court of Appeals to take the issue, and that court would have to decide whether to accept it.

Underhill’s Feb. 24 opinion held that the investors had adequately pleaded that Genesis Yield was a security, allowing claims under the federal Securities Act and Securities Exchange Act to proceed. He also lifted the discovery stay imposed by the Private Securities Litigation Reform Act. The judge defined the Genesis Yield program as “the investment agreements, the corresponding opportunity to invest digital assets, and the investors’ tender of those digital assets.” Referring briefly to the legal framework, he wrote: “Because each Reves factor weighs in favor of the plaintiffs, I conclude that the TAC plausibly alleges that the Genesis Yield program constituted a security.”

The lawsuit centers on allegations that Genesis, DCG and Silbert misled investors about Genesis’s risk management and financial condition. According to the plaintiffs, the defendants made material misstatements and omissions about Genesis’s solvency, including by concealing a large equity hole after the default of crypto hedge fund Three Arrows Capital. The investors say they suffered losses after Genesis suspended withdrawals and later entered bankruptcy.

Genesis was one of the major crypto lenders swept up in the market shocks of 2022, and its collapse became one of the sector’s highest-profile failures. Genesis Global Holdco and two lending affiliates filed for Chapter 11 bankruptcy protection in January 2023 after a liquidity crisis tied to that turmoil. DCG is Genesis’ parent company, and Silbert is DCG’s founder and longtime executive. For now, the case remains before Underhill in the U.S. District Court for the District of Connecticut, with the New York fraud claim and federal securities claims still alive, while the threshold question of whether Genesis Yield is a security may be headed for early appellate review if the 2nd Circuit agrees to hear it.