Genesis Files Lawsuit Against Gemini to Claim Preferential Transfers
The crypto industry is usually embroiled in a legal tussle with financial regulators. However, there is an ongoing dispute between two blockchain service providers namely Genesis and Gemini Exchange.
Genesis is a cryptocurrency lending services provider that took Gemini Exchange to court regarding preferential claims. The bankrupted firm intends to collect $689 million from the trading platform in a 21st November court filing.
The lending company has retained in a court filing that Gemini cashed out a gross amount of more than $689 million before 90 days of its bankruptcy filing. The firm also alleged that the massive withdrawal was at the expense of creditors and has continued to generate profits for the firm.
The lender intends to withdraw the profits from the withdrawn funds. On this account, the plaintiffs have invoked the Bankruptcy Code to reverse the unfairness and reclaim the withdrawn funds.
Genesis and Gemini Engage in a Fight Over Funds Distribution
Genesis and Gemini have previously engaged in public banter regarding the transfer and use of funds on social media. The claiming party intends to return the trading platform to the same state as its creditors.
Eventually, the dispute led to a lawsuit following the demise of FTX exchange in 2022. On this account, the top executives of the firms have also exchanged accusations and harsh comments from time to time.
Prior to the legal action from Genesis, Gemini filed an adversary proceeding against the firm on 27th October. The lawsuit was seeking to utilize 62 million shares of Grayscale Bitcoin Trust as collateral to secure loans from 232K Gemini investors.
These consumers are account holders in the Gemini Earn program. The collateral amount is valued in $1.6 billion. However, Genesis filed for bankruptcy in January this year following suspension of withdrawals last year.
Gemini to Face Financial Issues
When Genesis Exchange filed for bankruptcy in the first month of the ongoing year, Gemini Earn Program suffered from financial damages.
On this account, the trading platform initiated a lawsuit against the parent company of Genesis namely Digital Currency Group or DCG, and its CEO Barry Silbert for committing fraud. The lawsuit in question was filed in July this year.
Meanwhile, Genesis also brought a lawsuit against DCG to claim repayment of $600 million in loans. The lending firm launched the lawsuit against its parent company in September last year. The filing alleged that DCG borrowed $500 million in the form of various installations from Genesis in 2022.
Furthermore, DCG borrowed 18,697 Bitcoins in 2019. Genesis and DCG signed a loan agreement last year in November. Genesis’s lawsuit reveals that the firm did not agree to convert the borrowed funds into open loans following a notification from DCG.
