All about Genesis and Gemini’s $689 mln legal blitz
- This is part of an ongoing and publicized feud between the two entities.
- The feud has not only played out in the courtroom but has also drawn regulatory attention.
In a recent court filing on Tuesday, crypto lender Genesis Global Capital launched a legal offensive against cryptocurrency exchange Gemini Trust, seeking to recover a substantial sum exceeding $689 million.
This move is part of an ongoing and publicized feud between the two entities, stemming from the collapse of FTX [FTT] and subsequent bankruptcy proceedings initiated by Genesis in January.
The latest legal action is marked by Genesis accusing Gemini of preferential transfers totaling approximately $689,302,000, allegedly to the detriment of other creditors.
All about court filings
The court filing asserts that Gemini engaged in “unprecedented withdrawals” during a tumultuous period. That time was already marked by the collapse of Terraform Labs and the digital asset hedge fund Three Arrows Capital.
These withdrawals allegedly contributed to a “run on the bank,” creating additional financial strain on Genesis. The 90-day preference period leading up to the bankruptcy filing saw Gemini demanding repayment of prior loans made to Genesis.
The legal documentation contends that these withdrawals by Gemini were “avoidable” and occurred during a time when Genesis was believed to be insolvent.
This has prompted Genesis Global Capital to seek redress, characterizing the preferential transfers as unfair and requesting the court’s intervention to address this perceived injustice.
The figure of $689 million looms large in this legal drama, underscoring the significant financial stakes involved in the dispute.
Another day, another update in the Genesis-Gemini saga
The genesis of this legal dispute can be traced back to January.
The collapse of FTX led Genesis to file for bankruptcy. The U.S. Securities and Exchange Commission (SEC) swiftly intervened, accusing both Genesis and Gemini of selling unregistered securities, further escalating the situation.
Last month, New York Attorney General Letitia James filed a lawsuit against Digital Currency Group (DCG), the parent company of Genesis, Gemini, and Genesis itself.
The lawsuit implicated the entities in defrauding over 230,000 investors. This included at least 29,000 New Yorkers, of more than $1 billion.
Gemini sued Genesis in July over claims described by DCG as “defamatory”. In September, Genesis retaliated by suing its parent company, DCG. It sought repayment of multiple loans totaling over $600 million.
October witnessed another legal volley when Gemini sued Genesis over 60 million shares of the Grayscale Bitcoin [BTC] Trust (GBTC). The shares were valued at around $1.6 billion.