Gemini sues Genesis over $1.6 bln in Grayscale Bitcoin Trust shares
- The lawsuit highlights a long-standing dispute between Gemini and Genesis that originated last year.
- Gemini’s primary objective is to regain access to the Grayscale Bitcoin Trust shares.
Gemini has filed a lawsuit against digital asset lender Genesis concerning the rightful ownership of approximately $1.6 billion in Grayscale Bitcoin [BTC] Trust shares. This legal battle comes as Gemini strives to regain control of the shares to satisfy the claims of its Earn program clients.
The lawsuit, which was filed in the U.S. Bankruptcy Court Southern District of New York, highlights a long-standing dispute between Gemini and Genesis that originated last year.
The conflict began when Genesis served as a primary lending partner for Gemini’s Earn product, which allowed customers to earn returns on their cryptocurrency holdings.
However, the situation took a different turn following the collapse of the major crypto exchange FTX and the subsequent turmoil that rippled through the crypto industry.
Genesis suspended withdrawals, leaving Gemini’s Earn program clients in a state of uncertainty about the fate of their funds.
A new twist in the Gemeni Genesis saga
In a recent filing related to the lawsuit, Gemini emphasized the importance of resolving this matter, stating,
“Today, the Collateral is worth nearly $1.6 billion, an amount that would completely secure and satisfy the claims of every single Earn User.”
Genesis, which is a part of the Digital Currency Group (DCG), a prominent player in the crypto industry, has faced financial challenges recently.
Genesis Global declared bankruptcy in January, and the company announced the cessation of all its operations just last month.
Gemini claims Genesis is the problem
In a blog post addressing the lawsuit, Gemini expressed its concerns about the situation, stating,
“There is only one problem — Genesis. Genesis is the impediment to making the Earn Users whole. Genesis is seeking to take value away from Earn Users and funnel it to other creditor groups.”
Meanwhile, New York Attorney General Letitia James filed a lawsuit on 19 October against Gemini Trust, Genesis Global Capital, and Digital Currency Group (DCG) for allegedly defrauding more than 230,000 investors, including at least 29,000 New Yorkers, of over $1 billion.
The lawsuit alleges that Gemini knew Genesis’ loans were unsecured and did not disclose this information to investors. James is seeking to ban these companies from the financial investment industry in New York.