Gemini

United

Bitcoin

Grayscale Bitcoin Trust

This legal action follows the termination of an agreement that allowed users to lend digital assets to Genesis via Gemini's platform. 
In the court documents filed, Genesis, a subsidiary of Digital Currency Group, alleges that <a href="https://financefeeds.com/gemini-criticizes-genesis-recovery-plan-as-deceptive-at-worst/">Gemini</a> made massive withdrawals from Genesis during a critical 90-day preference period before Genesis's bankruptcy proceedings began in January. These withdrawals are deemed "avoidable transfers" in the filing, which Genesis claims were made to the detriment of other creditors. 
The lawsuit is asking the court to apply remedies provided by the United States Bankruptcy Code to rectify the situation. The goal is to return the defendants to the same position as other creditors of Genesis who did not benefit from these preferential transfers. 
The legal battle between the two crypto companies has intensified following the <a href="https://financefeeds.com/genesis-reaches-175m-settlement-with-ftx-avoiding-4b-claim/">collapse of FTX</a> in November 2022, leading to a public feud involving the CEOs of both firms. The contention centers on the recovery of funds, with accusations flying back and forth over non-cooperation and threats of legal action. 
Previously, Gemini had taken legal action against Genesis to access <a href="https://financefeeds.com/gemini-says-genesis-gbtc-shares-would-repay-all-earn-claims/">shares of the Grayscale Bitcoin Trust</a> used as collateral to secure loans to Genesis through the Gemini Earn program. These shares are currently valued at roughly $1.6 billion. 
The lawsuit, filed as part of Genesis’ bankruptcy proceedings, seeks to establish its claim over the GBTC shares that were pledged as collateral. The exchange argues that acquiring control of these shares would fully secure and satisfy the claims of all its Earn customers, who faced frozen funds when Genesis halted withdrawals last year. 
Genesis's bankruptcy has had a terrible impact on the Gemini Earn program and has spawned a series of lawsuits, including one by Gemini against Digital Currency Group and its CEO Barry Silbert, alleging fraud. Conversely, Genesis has also sued DCG seeking repayment of loans exceeding $600 million. 
Amidst this ongoing dispute, U.S. regulatory bodies have also stepped in. The SEC has previously alleged that Genesis and Gemini were selling unregistered securities, and the New York Attorney General filed a <a href="https://financefeeds.com/genesis-looks-to-expedite-bankruptcy-payouts-due-to-nyag-suit/">lawsuit accusing DCG, Genesis, and Gemini</a> of defrauding investors. 
The court filing suggests that the market disturbances caused by events like the <a href="https://financefeeds.com/genesis-ordered-to-produce-documents-related-to-terra-collapse/">collapse of Terraform Labs</a> and Three Arrows Capital led to Gemini making withdrawals from Genesis, contributing to a "run on the bank" scenario. These actions are now under scrutiny as potentially preferential and avoidable, considering Genesis's financial state at the time.

Genesis-Gemini battle escalates over $689 million withdrawals

FinanceFeeds

Other articles published on Nov 22, 2023

Mastercard and Feedzai Unite for Crypto Fraud Protection Globally

$225 million in liquidations as Binance faces turmoil with CEO exit

Middle East Retail & Ecommerce Summit 2023: Shaping the Future of Middle East’s Retail & E-commerce

Binance Reveals Winning Design for Pierre Gasly’s Fan-Designed F1 Helmet

Binance Settles With U.S. Authorities, Agrees to Pay $4.3 Billion Penalty as CEO Faces Potential ...

CoinGecko Acquires Zash To Expand Its Crypto Data API

Join our free newsletter for daily crypto updates!