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Genesis vs. Gemini: $689 Million Lawsuit
In a new twist to the ongoing saga between crypto
lenders and exchanges, Genesis Global Capital, which filed for bankruptcy in
January, has launched a lawsuit against the cryptocurrency exchange Gemini. The
legal action seeks to recover a substantial sum of $689 million in preferential
transfers, according to court documents filed on November 21.
The origin of this legal dispute can be traced
back to the collapse of the FTX crypto exchange in November 2022. Following the
exchange’s downfall, the two crypto giants, Genesis and Gemini, found
themselves entangled in a public feud over the recovery of funds, leading to
the escalation of conflicts into full-fledged lawsuits.
Genesis alleges that during the critical 90-day
period preceding its bankruptcy filing, Gemini withdrew an “aggregate
gross amount of no less than approximately $689,302,000.” The lawsuit
contends that this withdrawal occurred at the expense of other creditors, and
Gemini continues to benefit by retaining property that Genesis is now
attempting to recover. In response, Genesis’s legal team has called upon the
court to utilize remedies provided by the United States Bankruptcy Code to
rectify the perceived unfairness and restore parity among all creditors.
Beyond the courtroom battles, the CEOs of both
companies engaged in public disputes, accusing each other of non-cooperation
and even issuing threats of legal action. The tension reached a new level when Gemini filed an
adversary proceeding against Genesis on October 27. The filing aimed to
leverage 62,086,586 shares of its Grayscale Bitcoin Trust, which had been used
as collateral to secure loans extended to Genesis through the Gemini Earn
program. At present, the collateral is estimated to be valued at approximately
$1.6 billion.
🚨BREAKING: #Genesis
sues #Gemini
to recover “preferential transfers” worth $689m—
Satoshi Club (@esatoshiclub) November
22, 2023
Winklevoss
Twins Face Allegations of $282 Million Secret Withdrawal
Finance Magnates reported earlier that
Cameron
and Tyler Winklevoss, the Co-Founders of Gemini, were
facing scrutiny following reports of an alleged hidden withdrawal of $282
million from the now-bankrupt crypto lender, Genesis. The withdrawal reportedly
occurred just months before Genesis collapsed entirely, adding another layer of
complexity to the ongoing legal battles within the cryptocurrency industry.
Gemini has recently experienced a series of
setbacks, including layoffs and a decline in trading volumes. The situation
escalated when over $900 million in Gemini customer deposits were frozen due
to the collapse of Genesis,
which facilitated Gemini Earn, an interest-bearing program.
The
withdrawal of funds by the Winklevoss twins has raised questions about whether
the funds were corporate assets or part of their personal crypto holdings.
Internal documents indicate that the substantial withdrawal included various
cryptocurrencies, such as Bitcoin, Ethereum, Gemini’s stablecoin, Dogecoin, and
more. The timing of this withdrawal, just months before Genesis suspended
customer withdrawals, raises suspicions about whether the Winklevoss twins were
aware of the impending collapse.
The
Winklevoss twins had previously sued DCG, the parent company of Genesis, and
its CEO, Barry Silbert, alleging that they were provided with misleading
information about Genesis’s financial health. The
bankruptcy filing by Genesis in January had a ripple effect on the Gemini
Earn program. The lawsuit claimed that DCG offered a promissory note instead of
the promised financial backing. Despite their attempts to exit the Gemini Earn
partnership, the Winklevoss twins asserted that Silbert convinced them
otherwise during a face-to-face meeting.
In a new twist to the ongoing saga between crypto
lenders and exchanges, Genesis Global Capital, which filed for bankruptcy in
January, has launched a lawsuit against the cryptocurrency exchange Gemini. The
legal action seeks to recover a substantial sum of $689 million in preferential
transfers, according to court documents filed on November 21.
The origin of this legal dispute can be traced
back to the collapse of the FTX crypto exchange in November 2022. Following the
exchange’s downfall, the two crypto giants, Genesis and Gemini, found
themselves entangled in a public feud over the recovery of funds, leading to
the escalation of conflicts into full-fledged lawsuits.
Genesis alleges that during the critical 90-day
period preceding its bankruptcy filing, Gemini withdrew an “aggregate
gross amount of no less than approximately $689,302,000.” The lawsuit
contends that this withdrawal occurred at the expense of other creditors, and
Gemini continues to benefit by retaining property that Genesis is now
attempting to recover. In response, Genesis’s legal team has called upon the
court to utilize remedies provided by the United States Bankruptcy Code to
rectify the perceived unfairness and restore parity among all creditors.
Beyond the courtroom battles, the CEOs of both
companies engaged in public disputes, accusing each other of non-cooperation
and even issuing threats of legal action. The tension reached a new level when Gemini filed an
adversary proceeding against Genesis on October 27. The filing aimed to
leverage 62,086,586 shares of its Grayscale Bitcoin Trust, which had been used
as collateral to secure loans extended to Genesis through the Gemini Earn
program. At present, the collateral is estimated to be valued at approximately
$1.6 billion.
🚨BREAKING: #Genesis
sues #Gemini
to recover “preferential transfers” worth $689m—
Satoshi Club (@esatoshiclub) November
22, 2023
Winklevoss
Twins Face Allegations of $282 Million Secret Withdrawal
Finance Magnates reported earlier that
Cameron
and Tyler Winklevoss, the Co-Founders of Gemini, were
facing scrutiny following reports of an alleged hidden withdrawal of $282
million from the now-bankrupt crypto lender, Genesis. The withdrawal reportedly
occurred just months before Genesis collapsed entirely, adding another layer of
complexity to the ongoing legal battles within the cryptocurrency industry.
Gemini has recently experienced a series of
setbacks, including layoffs and a decline in trading volumes. The situation
escalated when over $900 million in Gemini customer deposits were frozen due
to the collapse of Genesis,
which facilitated Gemini Earn, an interest-bearing program.
The
withdrawal of funds by the Winklevoss twins has raised questions about whether
the funds were corporate assets or part of their personal crypto holdings.
Internal documents indicate that the substantial withdrawal included various
cryptocurrencies, such as Bitcoin, Ethereum, Gemini’s stablecoin, Dogecoin, and
more. The timing of this withdrawal, just months before Genesis suspended
customer withdrawals, raises suspicions about whether the Winklevoss twins were
aware of the impending collapse.
The
Winklevoss twins had previously sued DCG, the parent company of Genesis, and
its CEO, Barry Silbert, alleging that they were provided with misleading
information about Genesis’s financial health. The
bankruptcy filing by Genesis in January had a ripple effect on the Gemini
Earn program. The lawsuit claimed that DCG offered a promissory note instead of
the promised financial backing. Despite their attempts to exit the Gemini Earn
partnership, the Winklevoss twins asserted that Silbert convinced them
otherwise during a face-to-face meeting.
#Genesis #Gemini #Million #Lawsuit
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