Crypto exchange Gemini is suing Digital Currency Group and its founder Barry Silbert, with Gemini co-founder Cameron Winklevoss to blame Silbert that he was “the architect and mastermind of the DCG and Genesis fraud against creditors”.
The move came after Winklevoss issued Silbert an ultimatum last week to immediately pay $640 million he says is owed to Gemini’s Earn clients or face a lawsuit.
“This lawsuit is intended to recover from Defendants damages and losses incurred by Gemini as a direct result of DCG and Silbert’s false, misleading, and incomplete statements and omissions to Gemini, and Defendants’ role in encouraging and facilitating Genesis’s fraud against Gemini,” according to the complaint.
Winklevoss has argued that Gemini Earn users are stuck limbo with more than $1.2 billion in assets tied up in Genesis Global, which DCG owns.
Gemini Earn allowed people to lend digital assets to Genesis Global as part of a three-party contract.
DCG responds
DCG said in a rack on Twitter that the lawsuit was “another publicity stunt by Cameron Winklevoss”. It said any suggestion of wrongdoing by DCG or its employees is “baseless, defamatory and utterly false”.
The company said it continues to work with creditors and an ongoing mediation process is “close to completion”.
“We expect to bring the Genesis Chapter 11 case to a close soon,” DCG said in the statement.
Genesis bankruptcy
Genesis Global filed for bankruptcy protection earlier this year following a financial blow following the collapse of crypto hedge fund Three Arrows Capital and the FTX exchange last year.
Winklevoss has previously accused Silbert of delaying recovery efforts for Gemini Earn users. The program has been suspended since November.
The U.S. Securities and Exchange Commission sued both Gemini and Genesis earlier this year, saying the Earn program constituted an unregistered offering and sale of securities under U.S. law.
(Updates with commentary from DCG and additional background information.)
© 2023 The Block Crypto, Inc. All rights reserved. This article is for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.
