Gemini Is Suing Bankrupt Lender Genesis, Its Former Partner, for Over $1.6 Billion Worth of GBTC

Cryptocurrency exchange Gemini sued Genesis Global over ​60 million shares of Grayscale Bitcoin Trust, GBTC, pledged as collateral to Genesis Global.

Gemini filed a lawsuit to take control of GBTC shares as part of Genesis’ bankruptcy proceedings.⁢ Gemini said this ‍would “fully insure⁢ and satisfy all claims” of Earn customers – whose funds were⁢ frozen when Genesis froze ⁤withdrawals last year.

The⁢ lawsuit alleged that Genesis repeatedly took actions to‌ harm Earn users‍ and delay ​Earn users’ ability to recover their digital assets. It is time ‌to resolve this issue‌ so ‍that Genesis can move forward⁢ with a​ restructuring plan and Gemini can distribute the security ⁢proceeds to Earn customers.⁣

The ‍filing comes just a week ‌after⁤ New York Attorney General Letitia James filed a separate lawsuit against Gemini Genesis and ⁤DCG for allegedly defrauding over 230,000 investors of more ⁢than $1 billion.

Gemini and​ Genesis both​ found themselves in a difficult situation ⁢in 2022 following the collapse of​ Three Arrows Capital’s ​crypto ‌hedge fund and Sam Bankman ⁣Fried’s FTX. Genesis filed for bankruptcy in January.

Genesis and DCG announced in September that Gemini Earn customers would be “made nearly whole”‍ under a ‌proposed compensation deal.

Genesis did not immediately respond for comment.

Genesis and Gemini also agree on one point: ‍they oppose the US Securities and Exchange Commission’s‍ allegations that Earn is an unregistered investment.⁢ The companies filed a motion with​ a‌ court in⁣ May ⁣seeking dismissal of an SEC lawsuit targeting‍ the Earn program.