- July 7, 2023
- Posted by: AliensFaith
- Category: OBJECTIVE PRESS
Cryptocurrency exchange Gemini has dragged bankrupt digital lender Genesis’ parent company, Digital Currency Group (DCG), and its CEO, Barry Silbert, to court. In a lawsuit filed today (Friday) before a trial court in New York, the exchange accused both parties of “encouraging and facilitating” Genesis’ fraud against the firm.
Gemini Finally Challenges DCG in Court
According to the New York-based exchange, thousands of its users signed up for Gemini Earn Program under which they lent out their digital assets to Genesis in order to earn profit. However, Gemini in cooperation with its parent company lied about its “purportedly robust risk-management practices,” Gemini alleged in its court filing.
Instead, Genesis “was recklessly lending huge amounts to a counterparty [DCG and Silbert] knew was using these huge amounts to fuel a risky arbitrage trading strategy,” Gemini contended. In November, following FTX’s collapse and subsequent bankruptcy filing in New York, Genesis paused withdrawal on its platform, citing “unprecedented market turmoil.” The lender even sought a $1 billion emergency loan from investors.
In the court filing, Gemini said Genesis as a result of this exposure failed to honour its debt to the Earn Program lenders. Cameron Winklevoss, the Co-Founder of Gemini, has previously claimed that DCG was owing its customers over $900 million. On Tuesday, the CEO even proposed a ‘best and final offer’ of $1.47 billion in phased repayments to Gemini, to be completed by 2028.
DCG Lied About Absorbing Genesis’ Losses: Gemini
In its complaint, Gemini said it wants to recover damages and losses it had racked up as a direct result of Silbert’s “false, misleading, and incomplete representations and omissions” to its firm. Specifically, Gemini contended that the DGC Founder ‘falsely represented’ that the parent company had absorbed, through a $1.1 billion infusion, losses totalling $1.2 billion that Genesis incurred due to its exposure to the now-bankrupt crypto lender Three Arrow Capital (3AC). Ultimately, Silbert revealed that the supposed infusion was a promissory note not activatable until 2032.
“In direct reliance on Silbert’s misrepresentations, Gemini elected to delay the termination of the Gemini Earn Program—and not to explore the possibility of pursuing more rapid termination or other relief, as Gemini would have done if Silbert had stated the truth,” Gemini explained in the court document.
Since Genesis filed for bankruptcy protection in January 2023, Gemini has been working with the cryptocurrency lender “on a consensual restructuring” that would maximize recovery for Gemini Earn lender “without prolonged delay,” Gemini noted. The exchange added that it was separately pursuing its case against Genesis in the digital lender’s bankruptcy case.
This article was written by Solomon Oladipupo at http://www.financemagnates.com.
