Genesis Sues Gemini for $689M Recovery: A Legal Tussle in Crypto World

• The Genesis vs Gemini Legal Dispute Unveiled
• An In-depth Look into the Genesis-Gemini Conflict
• Genesis' Accusations and Legal Steps
• Attention from U.S. Authorities

The Genesis vs Gemini Legal Dispute Unveiled

A significant legal conflict has emerged between Genesis Global Capital and Gemini Trust. Genesis, a firm involved in cryptocurrency lending, has launched a lawsuit against its erstwhile partner, Gemini, with the intention of retrieving an amount over $689 million. According to the documents presented in court, Gemini is alleged to have made preferential transfers totalling nearly $689,302,000, leaving other creditors at a disadvantage. This has sparked a heated legal battle that illuminates the complexities and challenges present in the cryptocurrency industry.

An In-depth Look into the Genesis-Gemini Conflict

Tracing back to the FTX$3.28 -5.38% collapse, the battle between Genesis and Gemini was ignited. This key event set the groundwork for a string of public and legal disputes. In the face of financial turmoil, Genesis declared bankruptcy in January. Subsequently, its parent company, Digital Currency Group (DCG), faced legal challenges from Gemini in July. Gemini dismissed the allegations as defamatory and a mere publicity stunt. The legal drama continued with Genesis counter-suing DCG in September, demanding repayment for loans exceeding $600 million. In October, legal proceedings were initiated against Genesis over 60 million shares of the Grayscale Bitcoin$42,260 -0.64% Trust (GBTC), valued at around $1.6 billion.

Genesis' Accusations and Legal Steps

In this ongoing battle, Genesis accuses Gemini of making preferential transfers amid market disruption caused by the collapse of LUNA and TerraUSD. This was also compounded by issues encountered by the digital asset hedge fund, Three Arrows Capital. According to the lawsuit, Gemini carried out unprecedented withdrawals prior to Genesis' bankruptcy filing, leading to what Genesis refers to as a run on the bank.

Throughout the 90-day preference period, Gemini allegedly demanded the repayment of earlier loans provided to Genesis. These transfers are categorized as avoidable in the lawsuit. Genesis claims that these moves were made with the understanding that the company was insolvent. The lawsuit aims to correct what Genesis sees as unjust treatment, and to call out the preferential benefits given to Gemini at other creditors' expense.

Attention from U.S. Authorities

The dispute between Genesis and Gemini has drawn the focus of U.S. authorities. In January, only days before Genesis declared bankruptcy, the U.S. Securities and Exchange Commission (SEC) accused both Genesis and Gemini of selling unregistered securities. In a recent escalation of legal actions, New York Attorney General Letitia James filed a lawsuit against DCG, Genesis, and Gemini. The lawsuit claims that the trio defrauded more than 230,000 investors, including at least 29,000 New Yorkers, of over $1 billion.

Edited by Jonathan Stoker