- 1 Gemini and Genesis have become the names taken together these days across the crypto industry.
- 2 The crypto exchange firm has now filed a lawsuit against the beleaguered crypto lending firm.
In a high-stakes legal dispute, cryptocurrency exchange Gemini Trust Co. has formally filed a lawsuit against the now-defunct crypto lender, Genesis Global Holdco LLC. The heart of the controversy revolves around the rightful ownership of Grayscale Bitcoin Trust (GBTC) shares valued at nearly $1.6 Billion.
In a courtroom showdown that unfolded on Friday, Gemini’s legal team presented their case before a New York bankruptcy court, seeking a decisive ruling in their favor that would grant them access to over 62 Million GBTC shares. Gemini’s claim is rooted in the assertion that Genesis had committed to delivering these shares as collateral, securing loans extended to users through the Gemini Earn Program.
Gemini emphasized in its complaint that the total value of the contested collateral now stands at approximately $1.6 Billion. This sizable sum, if awarded to Gemini, would fully satisfy the claims of every participant in the Gemini Earn Program.
The ongoing legal clash between Gemini and Genesis, including its parent company, Digital Currency Group (DCG), has spanned several months. The dispute centers around the agreement governing the Gemini Earn Program. This initiative enabled users to lend their digital assets to Genesis Global under a tri-party contract which was prematurely terminated earlier this year.
Gemini argued that it had diligently scrutinized Genesis’s financial stability amidst the tumultuous cryptocurrency market events of the summer of 2022. This careful evaluation was part of their strategy to mitigate the risks associated with the Gemini Earn Program.
Furthermore, Gemini’s complaint accused Genesis of taking actions that harmed the interests of Earn Users and led to delays in the recovery of users’ digital assets.
Genesis Global’s lending unit had taken the step of seeking bankruptcy protection at the beginning of the year, further intensifying the ongoing legal struggle. Tyler and Cameron Winklevoss, co-founders of Gemini responded with leveled accusations against Genesis and DCG CEO Barry Silbert. They alleged that crypto lending firm executives misled investors.
Regulators have also waded into this complex dispute. The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against both Gemini and Genesis in January. The SEC’s claims centered on allegations of an unregistered securities offering within the Gemini Earn program.
Legal Attack From NY Legal Attorney
In a recent development, New York Attorney General, Letitia James reportedly entered the legal arena by filing a complaint against Genesis, Gemini, and DCG.
The lawsuit hones in on Gemini’s Earn program, which was promoted as a high-yield investment opportunity. This program allowed customers to invest through Genesis Global Capital, a subsidiary of DCG.
Attorney General Letitia James has asserted that Gemini was fully cognizant of the inherent investment risks associated with Genesis and, as a consequence, misled its customers. The unfolding legal proceedings promise to shed light on the intricate web of financial arrangements and allegations surrounding this substantial cryptocurrency dispute.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.