Gemini Files Lawsuit Against Genesis Global Over Ownership of GBTC Shares
Crypto exchange Gemini has recently filed a lawsuit against Genesis Global, a crypto platform, regarding the ownership of shares in the Grayscale Bitcoin Trust (GBTC). Gemini is seeking a determination from a federal judge to establish that Genesis does not have the right to over 60 million GBTC shares pledged as collateral for loans made by its users. The exchange argues that these shares should not be used to repay other creditors of Genesis.
Genesis Allegedly Harms Gemini Users and Hinders Collateral Recovery
The lawsuit states that Gemini entered into a security agreement with Genesis, where Genesis promised to deliver 62,086,586 GBTC shares as collateral. The value of this collateral is currently estimated at nearly $1.6 billion, which would fully secure the claims of Gemini users. However, Gemini alleges that Genesis has taken actions to harm its users and hinder their collateral recovery. These actions include challenging the validity of Gemini’s foreclosure on a portion of the collateral and halting the delivery of the remaining collateral.
Gemini Seeks Court Declaration on Collateral Ownership
Gemini claims that Genesis is proposing a reorganization plan that would divert value away from its users to other creditors. The exchange argues that only its users should be entitled to any gain resulting from the risk it assumes. Therefore, Gemini requests that the court declares it properly foreclosed on the initial collateral and that the amount set off against the deficiency claim should be the foreclosure value. Additionally, Gemini seeks a declaration of its secured interest in the additional collateral or that Genesis holds it in constructive trust for the benefit of Gemini users.
Gemini Lawyers Call for Resolution and Distribution of Collateral Proceeds
Gemini has repeatedly requested confirmation from Genesis regarding the transfer of additional collateral, but Genesis has not responded or completed the transfer. Gemini’s lawyers argue that it is time to resolve these issues so that Genesis can move forward with a reasonable plan of reorganization and Gemini can distribute the proceeds of the collateral to its users. The Earn program offered by Gemini, which allowed users to earn interest on their cryptocurrency holdings, has been affected by Genesis’ bankruptcy protection filing, leading to a halt on all withdrawal requests.
Hot Take: Gemini Takes Legal Action Against Genesis Global Over GBTC Shares Ownership
Gemini has filed a lawsuit against Genesis Global, claiming that Genesis has no right to over 60 million GBTC shares pledged as collateral for loans made by Gemini users. The exchange argues that these shares should not be used to repay other creditors of Genesis. Gemini seeks a court determination on collateral ownership and highlights that Genesis has taken actions to harm its users and hinder their collateral recovery. The exchange calls for resolution and distribution of the collateral proceeds. This legal dispute raises questions about the ownership of GBTC shares and the responsibilities of crypto platforms in protecting user assets.
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