- Gemini blames DCG for false, incomplete, and misleading representations
- Genesis lost $1.2 billion from 3AC collapse
US-based cryptocurrency exchange Gemini has announced a lawsuit against Digital Currency Group (DCG) and its CEO, Barry Silbert. They claim the conglomerate defrauded creditors, Cointelegraph reported.
Gemini initiated proceedings through a New York court filing on July 7, alleging that DCG and Silbert lent Genesis “huge amounts of cryptocurrency and US dollars.” This process, which Gemini considers a “scheme,” ended up incurring major losses. Gemini blames DCG and its CEO for making false, incomplete, and misleading representations and omissions and enabling Genesis to perpetrate fraud, to which the crypto exchange fell victim.
Gemini added they would take legal action in Genesis’ bankruptcy case as well.
False reporting
DCG subsidiary Genesis and Gemini launched the Earn lending program in 2021. The idea was that Gemini customers could loan crypto to Genesis and Genesis would repay it with interest.
This didn’t work out. At the end of 2022, Genesis suspended withdrawals over “unprecedented” market volatility. It filed for Chapter 11 bankruptcy soon thereafter.
Gemini cofounder Cameron Winklevoss has accused Silbert of false financial reporting. He tweeted on July 7 that Silbert knew Genesis was bankrupt when he continued the Earn program. The lawsuit alleges false reporting from DCG, of which the Three Arrows Capital collapse in June 2022 was a huge part. Winklevoss claims Genesis lost $1.2 billion from that.
Genesis owes Gemini $900M
Winklevoss further claims that Genesis and DCG owe his exchange’s clients $900 million. He stated:
Barry, DCG, and Genesis all conspired to create false financial reports to hide the truth from Gemini and creditors. This fraud goes to the very top. Barry Silbert and other DCG executives were directly involved in these lies and they lied again and again to conceal the truth from Gemini and other creditors.
Winklevoss has now made good on his threats to sue DCG and its CEO for delaying a solution to the issues between Genesis and his exchange. On July 4, he tweeted a “final offer” in the debt-restructuring negotiations, which was $1.5 billion in forbearance payments and new loans.
