Genesis Global Capital Sues Gemini for $689 Million
Recently, Genesis Global Capital, a crypto lender that has filed for bankruptcy, has taken legal action against Gemini Trust, a major cryptocurrency exchange. The purpose of the lawsuit is to recover $689 million, which Genesis claims were ‘preferential transfers’ made by Gemini, giving the exchange an unfair advantage.
U.S. Authorities Involved in Legal Proceedings
Following the collapse of the FTX crypto exchange, a public feud emerged between Genesis and Gemini, resulting in legal disputes over fund recovery. The saga involved U.S. authorities as well. In January, just before Genesis filed for bankruptcy, the U.S. Securities and Exchange Commission (SEC) accused both Genesis and Gemini of selling unregistered securities.
Last month, New York Attorney General Letitia James filed a lawsuit against DCG, Genesis, and Gemini, alleging fraud against over 230,000 investors, including at least 29,000 New Yorkers, totaling more than $1 billion.
The lawsuit claims that during the market turmoil caused by the collapse of Terraform Labs and digital asset hedge fund Three Arrows Capital, Gemini initiated “unprecedented withdrawals” before the bankruptcy filing, contributing to a “run on the bank.”
During the 90-day preference period, Gemini demanded the repayment of previous loans to Genesis, which Genesis argues were “avoidable” given their belief that Genesis was “insolvent.” This fallout led to Gemini suing Genesis’s parent company, DCG, and its CEO Barry Silbert for fraud in connection with the Earn program in July.
Hot Take: Legal Battles and Cryptocurrency Fallout Continue
The legal battle between Genesis Global Capital and Gemini Trust highlights the ongoing struggle in the cryptocurrency industry, with major players engaging in legal disputes and facing allegations of fraud. The involvement of U.S. authorities adds another layer of complexity to these proceedings, underscoring the challenges and controversies surrounding the regulation and operation of crypto exchanges and lending platforms. As the fallout from Genesis’s bankruptcy continues to unfold, it remains to be seen how these legal battles will impact the broader cryptocurrency market and investor confidence.
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