Crypto exchange Gemini has filed a lawsuit against Digital Currency Group (DCG) and its founder Barry Silbert. This was announced by the co-founder of the platform Cameron Winklevoss.
“Barry was not only the architect and mastermind of the DCG and Genesis fraud against creditors, but was directly and personally involved in its perpetration,” Winklevoss wrote.
The lawsuit seeks damages against Gemini as a result of “false, misleading, and incomplete representations and omissions by DCG and Silbert.”
According to Winklevoss, the founder of Digital Currency Group knew about the insolvency of Genesis. With his statements, he allegedly covered up a “gaping hole in the balance sheet” of the firm in the amount of $1.2 billion.
“Barry, DCG and Genesis colluded to create false financial statements in order to hide the truth from Gemini and creditors,” said the co-founder of the exchange.
The lawsuit follows a $1.46 billion “final offer” from Winklevoss to the DCG founder as part of paying off his debt.
The parties are striving to find an acceptable solution to the Genesis agreement proposed in February 2023 with creditors, according to which the latter will be able to return 80% of the lost funds. The agreements provided for the gradual zeroing of the Genesis loan portfolio and the sale of insolvent structures.
However, in May, DCG missed paying $630 million in compensation to the bitcoin exchange. Gemini filed a lawsuit in which it immediately demanded the return of $1.1 billion for 232,000 affected users of the Earn service.
Genesis owes more than $3.5 billion in total to its top 50 creditors, including Gemini, Cumberland, Mirana, MoonAlpha Finance and New Finance Income Fund VanEck.
The group’s lending business needed financial support after the June 2022 bankruptcy of cryptocurrency hedge fund Three Arrows Capital.
Recall that on November 6, 2022, Genesis Global Capital froze the withdrawal of funds and the issuance of new loans. The firm cited “increased demand” from customers following the collapse of FTX.
In January 2023, Genesis Global Holdco and its subsidiaries Genesis Asia Pacific and Genesis Global Capital filed for bankruptcy. According to media reports, their liabilities exceed $3 billion.
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