Lawsuit Initiated by Gemini
Crypto exchange Gemini has recently filed a lawsuit against digital asset lender Genesis to gain control over $1.6 billion worth of Grayscale Bitcoin Trust shares. The lawsuit, filed in the U.S. Bankruptcy Court Southern District of New York, aims to repay clients of Gemini’s Earn program by recovering the shares.
Gemini’s Earn program allowed customers to earn returns on their cryptocurrency holdings. However, after the collapse of major crypto exchange FTX and subsequent industry-wide turmoil, Genesis halted withdrawals, leaving Earn customers uncertain about the fate of their funds.
Gemini is determined to retrieve the funds and fulfill its obligations to its clients. According to the lawsuit, the collateral, now valued at nearly $1.6 billion, would fully secure and satisfy the claims of all Earn users. However, the main hurdle in this process is Genesis.
Genesis and the Lawsuit Allegations
Genesis, a company under Digital Currency Group (DCG), has been accused of obstructing the effort to compensate Earn users and diverting the value to other creditor groups. DCG also controls the Grayscale Bitcoin Trust, the largest Bitcoin fund in the world.
“Genesis has repeatedly taken actions to harm Earn users and to hinder and delay Earn users’ recovery of their digital assets,”
In a blog post addressing the lawsuit, Gemini expressed its intent to hold Genesis accountable for its actions and to ensure the recovery of their clients’ assets. Gemini has also accused DCG CEO Barry Silbert of employing “bad faith stall tactics” to delay a resolution in the ongoing dispute.
Recent Developments
Genesis Global, a subsidiary of DCG, filed for bankruptcy in January and subsequently announced the cessation of all operations. Last month, the New York Attorney General’s office sued DCG, Genesis Global Capital, and Gemini Trust, alleging that the companies defrauded customers of $1.1 billion.
