Gemini Trust Co., a major player in the crypto space. has launched a legal battle against financially troubled cryptocurrency lending platform Genesis Global Holdco LLC. The lawsuit was filed to find out who is the legitimate owner of a significant amount of shares in the Grayscale Bitcoin Trust, which is valued at nearly $1.6 billion.
Gemini demands $1.6 billion worth of cryptocurrency
The Gemini vs Genesis battle continues and now it has made another move. Gemini Trust Co. is suing Genesis Global Holdco LLC amid the lender’s bankruptcy, setting off a dispute over who rightfully claims nearly $1.6 billion in Grayscale Bitcoin Trust shares. Gemini’s legal team filed with a bankruptcy court in New York today, seeking justice and access to 62 million GBTC shares. At the core of their claims is a promise Genesis allegedly made: to use those shares as a safety net for loans made through Gemini’s Earn Program. Now Gemini is confident about reneging on what they see as a promise to their users. Gemini said:
Today, the Collateral is worth approximately $1.6 billion, an amount that will fully secure and cover the demands of each Earn user.
Gemini is in a bitter legal battle with Genesis and parent company Digital Currency Group over a now-defunct agreement from the Gemini Earn Program, in which users loaned crypto assets to Genesis. The collaboration ended earlier this year. According to Gemini’s legal filings, they have scrutinized Genesis’ financial health to protect their EarnProgram amid the market chaos of 2022. The complaint also highlights Gemini’s accusations that Genesis acted to disadvantage users and prevent recovery of their digital assets.
Both Gemini and DCG are in trouble
At the beginning of the year, Genesis’ credit business collapsed. Gemini co-founders Tyler and Cameron Winklevoss have made serious allegations against Genesis and DCG CEO Barry Silbert, accusing them of deceiving investors. Last week, New York Attorney General Letitia James filed a lawsuit against a number of major cryptocurrency companies, including the Gemini exchange run by the Winklevoss twins and others such as Genesis Global Capital and Digital Currency Group. She says they deceived people and caused them to lose more than $1 billion.
On October 19, James accused Gemini and others of fraud. He said that they get people to deposit their money into Gemini Earn by telling them that it is safe and will make them a lot of money. But this wasn’t true. Gemini and Genesis were running this program and things got really bad. Approximately 232,000 people who invested were no longer able to access their money, and some even lost everything they invested. The lawsuit says they completely misled their customers. In 2022, both Gemini and Genesis hit a rough patch after the collapse of crypto hedge fund Three Arrows Capital and Sam Bankman-Fried’s FTX. Currently, Sam Bankman-Fried is facing a trial. He defends himself by insisting that he did not defraud anyone.
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