A $14 billion RICO lawsuit filed by ProHashing co-founder Steve Sokolowski against Digital Currency Group (DCG) CEO Barry Silbert has surfaced, leveling explosive allegations that re-litigate the Bitcoin “Block Size War” as a criminal conspiracy. The Second Amended Complaint, which gained traction on Reddit this week, accuses Silbert of leading a “Digital Gold” enterprise that allegedly hacked U.S. miners and laundered proceeds to capture the Bitcoin protocol.
The Allegations: “Digital Gold” as a Criminal Enterprise
The 967-page filing paints a picture of industrial sabotage. Sokolowski alleges that DCG, in concert with other entities, orchestrated a campaign to cripple the Bitcoin network’s transactional capacity, forcing users into “Wall Street” off-chain solutions like those offered by DCG subsidiaries. The suit claims this was achieved through:
- Miner Hacking: The complaint alleges Silbert’s enterprise “hacked” the ProHashing mining pool, causing $22 million in damages, to suppress opposition during the block size debates.
- Monero Laundering: It accuses the defendants of using Monero (XMR) to launder the proceeds of these alleged attacks.
- Protocol Capture: The filing argues DCG conspired with Chinese mining entities to centralize control over Bitcoin, effectively “capturing” the protocol to enforce the “store of value” narrative benefiting DCG’s Grayscale assets.
“The purpose of his theft was to win the ‘block size war,’ which limited the bitcoin protocol’s capabilities so that people were forced to ‘invest’ in Wall Street ETFs.”, Steve Sokolowski, Plaintiff
Institutional & Legal Context
While the New York Attorney General is actively pursuing DCG for alleged fraud regarding the Genesis bankruptcy, this RICO suit is distinct. It represents a civil action by a private plaintiff rather than a government enforcement agency. The inclusion of Jefferies Financial and allegations of a “sham lawsuit” involving Vincent Falco mark a significant escalation in the legal crossfire surrounding Silbert.
The market has largely ignored the filing so far, with Bitcoin (BTC) trading flat at $96,400. However, the release of what Sokolowski calls the “Digital Gold Logs”, purported internal communications decoded from the blockchain, could offer new ammunition for DCG’s existing creditors if verified.
