A Financial Dispute between Gemini and Genesis
The exchange platform Gemini has recently filed a lawsuit against the bankrupt crypto lending company Genesis. At the center of this legal battle are 1.6 billion dollars, represented by 62 million shares of Grayscale Bitcoin Trust (GBTC).
Gemini accuses Genesis of mishandling these GBTC shares, which were supposed to be used as collateral for loans through the exchange’s product, Earn.
Gemini claims that Genesis seeks to divert part of the total value of the collateral to other creditors instead of returning it to EARN users. Gemini finds this maneuver unacceptable and emphasizes that the 1.6 billion dollars in collateral would fully reimburse every EARN user.
In addition, Gemini explains that it has already recovered around 285 million dollars by seizing the collateral. However, Genesis is contesting this action, preventing the distribution of funds to affected users. According to Gemini, “Genesis has repeatedly taken steps to harm Earn users and to hinder and delay the recovery of their digital assets by Earn users.”
DCG, Genesis’ Parent Company, also Under Scrutiny
The situation is further complicated by the involvement of Digital Currency (DCG), Genesis’ parent company. DCG allegedly “transferred additional collateral” to Genesis solely for distribution to Gemini. However, Genesis intends to use these assets for other purposes.
If the court sides with Gemini, it could facilitate the return of over a billion dollars in digital assets that Genesis has wrongfully retained. Furthermore, Gemini Earn users account for 99% of Genesis’ creditors, and their claims represent 28% of all claims in terms of value.
The conflict has also caught the attention of regulators, including the New York Attorney General, who recently sued Gemini, Genesis, and DGC for defrauding users, including 29,000 New Yorkers, with the EARN program.
