Gemini Takes Legal Action Against Digital Currency Group and Barry Silbert Regarding Genesis and Earn Program

Gemini, a US-based cryptocurrency exchange, has initiated legal action against Digital Currency Group (DCG) and its CEO, Barry Silbert, alleging “fraud against creditors.” In a court filing on July 7, Gemini accused DCG and Silbert of participating in a scheme that involved lending significant amounts of cryptocurrency and US dollars to Genesis, a DCG subsidiary. Gemini aims to recover funds lost due to the alleged false representations and omissions made by DCG and Silbert, as well as their involvement in facilitating what Gemini refers to as Genesis’s fraud against the exchange. Gemini also plans to pursue legal action in Genesis’s bankruptcy case.

Genesis, responsible for operating the Earn program in collaboration with Gemini, offered users the opportunity to lend cryptocurrency with the promise of repayment and interest. However, in November 2022, Genesis halted withdrawals, citing “unprecedented market turmoil,” and subsequently filed for Chapter 11 bankruptcy.

Cameron Winklevoss, co-founder of Gemini, shared a Twitter thread on July 7, claiming that Silbert was aware of Genesis’s massive insolvency while attempting to continue the Earn program. Winklevoss alleged that DCG and Silbert engaged in false financial reporting following the collapse of Three Arrows Capital in June 2022, which caused a significant hole in Genesis’s balance sheet. Winklevoss stated that Genesis and DCG owe $900 million to Gemini’s clients.

Winklevoss further accused Silbert and other DCG executives of conspiring to create false financial reports to deceive Gemini and creditors. He stated, “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.”

The fallout from the Earn program has resulted in both Genesis and Gemini facing scrutiny from federal and state regulators. The US Securities and Exchange Commission filed a lawsuit in January, alleging that the firms offered unregistered securities, while the New York Department of Financial Services reportedly initiated an investigation into Gemini regarding the claims made in its Earn program.

Winklevoss had previously issued threats to sue DCG and Silbert over delays in resolving the issues between Gemini and Genesis. In a recent open letter, he proposed a “best and final offer” of $1.47 billion by 2028 to Silbert.

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