The U.S.-based crypto exchange Gemini has recently filed a lawsuit against the bankrupt crypto lender Genesis' parent company, Digital Currency Group (DCG), and its CEO, Barry Silbert. The firm accused the U.S.-based crypto conglomerate and its executive of fraud and deception. The two sides formerly offered a service dubbed Earn, allowing Gemini users to lend their coins to generate a yield through Genesis' infrastructure. - However, Genesis Global filed for bankruptcy in January after freezing withdrawals in November 2022, mainly due to its exposure to the collapses of the crypto exchange FTX and crypto hedge fund Three Arrows Capital (3AC).
- The bankruptcy also caused Gemini's Earn product to be halted in January, making some customer funds stuck.
- In May, Gemini submitted a claim to reimburse 232,000 Earn customers with more than $1.1B in assets as a major creditor in Genesis' bankruptcy process.
- In the recent lawsuit, Gemini said it was seeking to recover damages and losses incurred directly from DCG's and Silbert's false, misleading, and incomplete representations.
- The lawsuit also pointed out that Silbert contacted one of the Gemini founders in October and persuaded Gemini that the troubles they faced would last a short time.
- The exchange claimed that Silbert was, in fact, aware of Genesis' problems being far deeper than just a timing issue.
The lawsuit came shortly after Gemini co-founder Cameron Winklevoss published an open letter, presenting a final offer for DCG's restructuring with a deadline and a warning for a potential legal motion if the offer is not accepted. - Genesis has yet to reach an agreement on a restructuring plan with creditors, who are owed more than $3B, though it initially planned to do that by May.
- Genesis and Gemini were also sued by the U.S. Securities and Exchange Commission (SEC) in January over the allegation that the Earn product offered unregistered securities.
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