Good day everyone,
I hope you are all well and had an excellent week, welcome to CryptoGod-1’s blog on all things crypto. The cryptocurrency exchange Gemini has began its legal proceedings in a lawsuit against digital asset lender Genesis. This is in an attempt to gain control over $1.6 billion worth of Grayscale Bitcoin Trust shares.
Gemini Vs Genesis
Gemini Trust Co. have launched a legal battle against the bankrupt Genesis Global Holdco LLC, with the lawsuit filed on Friday the 27th of October 2023 in the U.S. Bankruptcy Court Southern District of New York. The lawsuit was filed to discover who is the legitimate owner of the substantial batch of shares in the Grayscale Bitcoin Trust. The sum is approaching $1.6 billion in value, and as part of the lawsuit they will aim to recover the shares in order to repay clients of the Gemini Earn program. The dispute began last year and Gemini and Genesis have been embroiled in the case since, with Genesis having served as a primary lending partner for Gemini’s Earn product.
The Earn program provided by Gemini had allowed customers to earn returns on their cryptocurrency holdings. The issue arose following the collapse of major cryptocurrency exchange FTX, and as the industry was in turmoil Genesis halted withdrawals. This left Earn customers uncertain about the fate of their funds, and Gemini aim to retrieve the funds and fulfil its obligations to its clients.
The collateral, nearly $1.6 billion, would fully secure and satisfy the claims of all Earn users. Gemini have noted that Genesis is acting as their main hurdle in this moment, with Gemini's legal team seeking justice and access to funds which they argue were part of a commitment made by Genesis as safety nets over loans given out through Gemini’s Earn Program.
Gemini noted the developments in a blog post, addressing the lawsuit and how Genesis is obstructing their effort to compensate Earn users. They also noted how Genesis is attempting to divert the value to other creditor groups. Parent company of Genesis, Digital Currency Group, also controls the Grayscale Bitcoin Trust as part of their umbrella group. Grayscale Bitcoin Trust is the world's largest Bitcoin fund. The collaboration between Genesis and Gemini for their Earn program ended earlier this year.The lawsuit alleges:
“Today, the Collateral is worth nearly $1.6 billion, an amount that would completely secure and satisfy the claims of every single Earn User. Genesis has repeatedly taken actions to harm Earn users and to hinder and delay Earn users’ recovery of their digital assets. It is time to resolve these issues so that Genesis may move forward with a reasonable plan of reorganization and Gemini may distribute the proceeds of the collateral to Earn users.”
Genesis Global, a subsidiary of DCG, filed for bankruptcy in January and recently announced the cessation of all operations. According to Gemini’s legal filings, they scrutinized Genesis’s financial health during the 2022’s market chaos in an attempt to protect their Earn Program. The filings go on to highlight Gemini’s accusations that Genesis acted to disadvantage users and prevent the recovery of their digital assets.
At the beginning of 2023 Genesis’s lending sector entered bankruptcy. The co-founder of Gemini, Tyler and Cameron Winklevoss, have since made serious allegations against Genesis and DCG CEO Barry Silbert, most notably that they deceived investors. Gemini was sued by the New York Attorney General, Letitia James, on the 19th of October 2023, along with DCG and Genesis Global Capital for allegedly defrauding customers of $1.1 billion. She noted that they tricked people and caused them to lose over $1 billion by getting people to put their money into the Gemini Earn program.
Both Gemini and Genesis were running this program, and when things went bad around 232,000 people who invested couldn’t get to their money anymore. Some lost everything they invested and the lawsuit notes how they totally mislead their customers. The shares of both Gemini and Genesis hit a rough patch after the downfall of the crypto hedge fund Three Arrows Capital and of course the bankrupt crypto exchange FTX.
Have a great day,
Peace. CryptoGod-1.
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