MEXCBreaking: Gemini Sues Genesis Over $1.6B Bitcoin Trust Shares
Winklevoss’ Gemini Trust Co. has been in a tussle with Genesis and its parent company Digital Currency Group (DCG) over the Gemini Earn program and in a recent development, Gemini has sued Genesis over Grayscale Bitcoin Trust (GBTC).
Gemini Sues Genesis: The Basis
Gemini operated a program that allowed users to lend digital assets to Genesis Global as part of a tri-party contract.
To utilize the capital, Genesis gave out the funds pooled in the Gemini Earn program as loans to large organizations and returned only a fraction as profit. A significant percentage of these loans were underscored and high-risk with third parties like FTX’s sister trading firm Alameda Research, at the center of it.
As part of the terms of their agreement, Genesis had pledged about 60 million shares of the Grayscale Bitcoin Trust (GBTC) as collateral to Earn product users. With their relationship gone sour, Gemini is trying to gain control over the GBTC which is now valued at $1.6 billion. According to the filing, Gemini requested that the judge rule that Genesis no longer have control over the GBTC shares and therefore, should not be used to repay any of Genesis creditors lined up in its bankruptcy proceedings.
In Gemini’s argument, the company stated that the GBTC shares would be sufficient to completely secure and satisfy the claims of every single Earn customer whose money was locked in Genesis when it suspended withdrawals on its platform last year. It is worth noting that most of these shares are held by Genesis and some of its affiliates.
DCG Proposal Rejected by Gemini
Genesis’ parent firm DCG had earlier proposed a remuneration plan that could bring the full compensation of all affected retail creditors and end months of uncertainty. In this plan, unsecured creditors could get baseline recovery of up to 70-90%. While that of Gemini Earn users would be significantly higher. Unfortunately, Gemini claimed this was a misleading proposition.
Meanwhile, there is a pending lawsuit against the trio; Gemini, Genesis and DCG. New York Attorney General Letitia James took legal action against the three crypto firms for defrauding 230,000 customers and swindling over $1 billion.
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