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.
