• Gemini files lawsuit against Digital Currency Group and Barry Silbert over Genesis and Earn program
• Allegations include fraud by knowing Genesis was “massively insolvent” when attempting to continue the Earn program
• Gemini seeks to recover funds incurred as a result of “DCG’s and Silbert’s false, misleading, and incomplete representations and omissions”
Gemini Files Lawsuit Against DCG And Silbert
United States-based cryptocurrency exchange Gemini has announced legal action against the conglomerate Digital Currency Group (DCG) and its CEO, Barry Silbert, claiming “fraud against creditors.” In a July 7 filing in a New York court, Gemini alleged DCG and Silbert engaged in a scheme involving lending “huge amounts of cryptocurrency and U.S. dollars” to Genesis. According to the filing, Gemini seeks to recover funds incurred as a result of “DCG’s and Silbert’s false, misleading, and incomplete representations and omissions to Gemini” and their role “in encouraging and facilitating Genesis’s fraud against Gemini.”
Background On The Earn Program
Genesis had been the crypto lender responsible for operating an Earn program in partnership with Gemini, which launched in 2021. The program claimed Gemini users could loan crypto to Genesis with the promise the firm would repay it with interest. However, the firm halted withdrawals in November 2022 citing “unprecedented market turmoil” before subsequently filing for Chapter 11 bankruptcy.
Allegations Of Fraud By Winklevoss
According to a July 7 Twitter thread from Gemini co-founder Cameron Winklevoss , Silbert knew Genesis was “massively insolvent” when attempting to continue the Earn program. The complaint included alleged false financial reporting from DCG and Silbert starting with the collapse of Three Arrows Capital in June 2022 which “blew a $1.2 billion hole in Genesis’s balance sheet.” Winklevoss has claimed that Genesis and DCG owe $900 million to Geminis clients adding that “Barry, DCG, and Genesis all conspired to create false financial reports to hide the truth from Gemini and creditors,” claiming that “this fraud goes to the very top.” He also alleges that “Barry Silbert was directly involved in these lies” with his alleged intention being “to conceal the truth from Geminis creditors.”
Damages Sought By Gemini
As such, Geminis legal action is seeking damages incurred as a result of what they allege are fraudulent activities by DCGs executives including Barry Silberts own involvement according along with pursuing legal avenues within Genesiss bankruptcy case itself.
Conclusion
In conclusion it appears that Geminis lawsuit is seeking recompense for losses due what they allege are fraudulent activities committed by Barry Silberts own involvement within Digital Currency Groups subsidiary company –Genesis– who were responsible for running an earn program which promised interest on crypt loans made by users but subsequently filed for chapter 11 bankruptcy after halting withdrawals due what they claim was unprecedented market turmoil