In
a legal battle that has been simmering since last year, cryptocurrency exchange
Gemini has taken its dispute with digital asset lender Genesis to court over
the rightful ownership of $1.6 billion in Grayscale Bitcoin Trust (GBTC)
shares.
Gemini’s
lawsuit, filed in the U.S. Bankruptcy Court Southern District of New York, seeks
to regain control of these shares to fulfill its obligations to clients of its
Earn program.
The
genesis of this dispute lies in Genesis’s previous role as the primary lending
partner for Gemini’s Earn product, which allowed customers to earn returns on
their cryptocurrency holdings.
However,
last year’s upheaval in the cryptocurrency industry, marked by the collapse of
mega-exchange FTX and its reverberations throughout the market, led to Genesis
suspending withdrawals. This left Gemini Earn customers in limbo, unsure of the
fate of their investments.
Gemini
is now striving to recover the $1.6 billion in GBTC shares, a sum that could
potentially secure and satisfy the claims of every Earn User who suffered
losses. In a recent court filing, Gemini stated, “Today, the Collateral is
worth nearly $1.6 billion, an amount that would completely secure and satisfy
the claims of every single Earn User.”
The
crux of the issue lies in Genesis’s involvement, as Gemini claims that Genesis
is obstructing the return of funds to Earn Users and attempting to divert these
assets to other creditor groups.
Genesis
Global is a subsidiary of Digital Currency Group (DCG). DCG also controls the
Grayscale Bitcoin Trust. In January, Genesis Global filed for bankruptcy, and
just last month, it announced the cessation of all its operations.
Gemini Trust was founded by the Winklevoss twins, Cameron
and Tyler Winklevoss. Cameron Winklevoss has alleged that DCG’s CEO, Barry
Silbert, is employing “bad faith stall tactics” to delay a resolution
to the dispute, further escalating the tension between the parties.
Gemini Trust is suing bankrupt crypto lender Genesis Global Holdco in an attempt to determine who rightfully owns a slug of shares in the Grayscale Bitcoin Trust now worth nearly $1.6 billion https://t.co/AMQrtaB5MN
— Bloomberg Crypto (@crypto) October 29, 2023
Winklevoss Twins
Under Scrutiny for $282 Million Withdrawal from Genesis
In an earlier report, Finance Magnates stated that Cameron
and Tyler Winklevos were facing scrutiny for an alleged secret withdrawal of
$282 million from the now-bankrupt crypto lender, Genesis, just months
before…
