Gemini sues Genesis for access to more than 62 million GBTC shares worth $1.6 billion

The cryptocurrency exchange Gemini has filed suit against Genesis Global Capital, seeking access to more than 62 million GBTC shares worth $1.6 billion. CoinDesk reports this.

\n«The collateral is currently valued at approximately $1.6 billion. The amount fully covers and satisfies the claims of every Earn user», the lawsuit states.

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The platform’s lawyers noted that Genesis pledged to provide GBTC shares as collateral for loans from Gemini Earn users.

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\n«Genesis has repeatedly harmed Earn users, impeded and delayed recovery of their digital assets. … It is time to resolve these issues so that Genesis can move forward with a sensible reorganization plan, and Gemini can distribute the proceeds from the collateral among users», the filing states.

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On 16 November 2022, Genesis Global Capital frozen withdrawals and the issuance of new loans. The firm cited “increased demand” from clients after the collapse of FTX.

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The trouble stemmed from the collapse of hedge fund 3AC in July of the same year. The latter did not meet its obligations to Genesis Global Capital for $2.36 billion. The backing for the firm came from its parent company DCG.

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In January 2023, Genesis Global Holdco and its subsidiaries Genesis Asia Pacific and Genesis Global Capital filed for bankruptcy. According to reports, their obligations exceed $3 billion. This amount includes claims by Gemini clients for $900 million.

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In May, DCG missed a payout of $630 million to the Bitcoin exchange. In July, Gemini filed suit, seeking the immediate return of $1.1 billion for 232,000 affected Earn users. DCG opposed this. This was followed by an ultimatum from the Winklevoss brothers, who sought a payout of $1.46 billion.

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In August, DCG promised to compensate Genesis creditors from 70% to 90% of funds. However the latter called the offer \”unsatisfactory\” and threatened to block any final bankruptcy deal on such terms.

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Back in September Genesis filed for suit against DCG over unpaid loans of $600 million. In the same month, reports said that Gemini moved $282 million before the counterparty’s bankruptcy.

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In October, the New York State prosecutors filed suit against Gemini, Genesis, DCG and the leadership of the companies, accusing them of deceiving more than 230,000 investors of more than $1 billion.

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