Genesis Faces Legal Battle as Gemini Files $1.6 Billion Lawsuit Over GBTC Dispute
In a major legal turn of events, Gemini, a leading player in the cryptocurrency exchange arena, has launched a lawsuit against its erstwhile collaborator, Genesis Global. This legal move arises from their previous partnership, specifically in connection with the Gemini Earn offering. The focal point of the litigation revolves around a substantial collateral amount, precisely involving 60 million shares of the Grayscale Bitcoin Trust (GBTC), previously committed as part of their accord. This episode represents a critical juncture in the cryptocurrency sector, as the clash unravels between these formerly allied entities.
Gemini has recently launched a legal move amidst the backdrop of Genesis' continuing bankruptcy proceedings. The primary goal is to secure authority over the GBTC shares. Gemini emphatically states that this endeavor is crafted to "comprehensively protect and meet the requirements of every single" Earn customer, whose funds were left in limbo due to Genesis' suspension of withdrawals last year. This calculated step highlights Gemini's unwavering dedication to resolving the issues faced by its impacted customer base.
The lawsuit claimed that Genesis has consistently engaged in actions aimed at causing harm to Earn users and impeding and prolonging the process of these users regaining access to their digital assets.
"It is time to resolve these issues so that Genesis may move forward with a reasonable plan of reorganization and Gemini may distribute the proceeds of the collateral to Earn users."
A few days following New York's Attorney General Letitia James commencing a distinct lawsuit against Gemini, Genesis, and DCG, alleging their involvement in deceptive strategies that have led to losses exceeding $1 billion for more than 230,000 investors, this most recent legal action has taken center stage.
In the year 2022, Gemini and Genesis navigated through a period of significant turmoil, prompted by the downturn experienced by the crypto hedge fund Three Arrows Capital and Sam Bankman-Fried's FTX, which eventually culminated in Genesis filing for bankruptcy in January.
As September rolled around, Genesis and DCG unveiled a comprehensive compensation package, offering strong assurance to Gemini Earn customers for substantial restitution. Furthermore, both Genesis and Gemini remained steadfast in their resolute rejection of allegations put forth by the U.S. Securities and Exchange Commission (SEC). The SEC contended that Earn represented an unregistered security. In response, in the month of May, the companies jointly submitted a petition to the court, seeking dismissal of the SEC lawsuit targeting the program.