Bankruptcy Sparks $689M Lawsuit Against Gemini
Bankrupt crypto lender Genesis Global Capital has taken legal action against cryptocurrency exchange Gemini, seeking to recover a staggering $689 million in what they allege as preferential transfers. This lawsuit, detailed in a Nov. 21 court filing, comes in the wake of Genesis’s bankruptcy filing in January.
Allegations of Preferential Treatment
According to the lawsuit, Gemini, within the 90-day period before Genesis’s bankruptcy, withdrew around $689 million. This action, Genesis argues, was at the expense of other creditors and continues to benefit Gemini, thus creating an uneven playing field among the creditors.
A Feud Between Crypto Giants
This legal battle is part of a larger feud between two of the cryptocurrency world’s giants. The relationship soured further following the collapse of the FTX crypto exchange in November 2022, leading to escalating public disputes and legal confrontations.
Gemini’s Legal Moves
Prior to this, in October, Gemini had initiated legal proceedings against Genesis to leverage 62 million shares of its Grayscale Bitcoin Trust as collateral. These shares, associated with loans made to Genesis through the Gemini Earn program, are currently valued at roughly $1.6 billion.
The Ripple Effect of Genesis’s Bankruptcy
Genesis’s bankruptcy has had significant repercussions, particularly affecting the Gemini Earn program. In response, Gemini had previously sued Genesis’s parent company, Digital Currency Group (DCG), and CEO Barry Silbert, alleging fraud.
Ongoing Legal Entanglements
The legal tussle continues, with Genesis also suing DCG in September for the repayment of loans exceeding $600 million, adding another layer to this complex and high-stakes legal saga in the crypto world.
