Key takeaways:
- In an attempt to recoup $689 million in privileged payments, Genesis Global Capital has launched a lawsuit against cryptocurrency exchange Gemini.
- Gemini allegedly benefited from this and is still doing so by keeping the property that Genesis is attempting to reclaim.
In an attempt to recoup $689 million in privileged payments, bankrupt cryptocurrency lender Genesis Global Capital has launched a lawsuit against cryptocurrency exchange Gemini, according to a November 21 court document.
According to the lawsuit, Gemini took an “aggregate gross amount of no less than approximately $689,302,000” from Genesis at the cost of other creditors over the ninety days prior to Genesis’s January bankruptcy filing. Gemini allegedly benefited from this and is still doing so by keeping the property that Genesis is attempting to reclaim.
Genesis’s council asked the court to apply the US Bankruptcy Code’s remedies to address the injustice and put the “Defendants in the same position as Plaintiff’s” other comparable creditors.
Following the demise of the cryptocurrency exchange FTX in November 2022, the two industry titans became involved in a public dispute concerning the recovery of funds, which eventually turned into lawsuits.
In addition to pursuing legal action, the CEOs of the two businesses engaged in public altercations during which they accused one another of being uncooperative and made threats to sue.
Gemini used 62,086,586 shares of its Grayscale Bitcoin Trust to file an adversary proceeding against Genesis on October 27. Through the Gemini Earn program, 232,000 Gemini users lent money to Genesis, using the shares as security. At the moment, the collateral is valued at about $1.6 billion.
After stopping withdrawals in November 2022, Genesis filed for bankruptcy in January. In July, the cryptocurrency exchange filed a fraud lawsuit against Digital Currency Group (DCG), the parent company of Genesis, and its CEO, Barry Silbert, alleging that the bankruptcy had a negative impact on the Gemini Earn program.
In an attempt to recover the payback of many loans totaling more than $600 million, Genesis sued DCG in September as well.
