In a new twist of the ongoing saga, bankrupt crypto lender Genesis Global Capital has launched a legal offensive against cryptocurrency exchange Gemini, seeking to recover a substantial $689 million in alleged preferential transfers. According to court documents filed on November 21, Genesis contends that within the 90 days leading up to its bankruptcy filing in January, Gemini withdrew approximately $689,302,000, seemingly at the expense of other creditors. The lawsuit asserts that Gemini is still benefiting by retaining assets that Genesis aims to recover.
Genesis’s legal representation has urged the court to utilize remedies outlined in the United States Bankruptcy Code to rectify what they perceive as unfair treatment, seeking to bring Gemini in line with other creditors in a similar position.
The discord between these crypto giants has been escalating, notably stemming from the aftermath of the collapse of the FTX crypto exchange in November 2022. Beyond legal battles, public disputes unfolded between the CEOs of both companies, accusing each other of noncooperation and issuing threats of legal action.
Gemini had previously taken legal action against Genesis on October 27, aiming to utilize 62,086,586 shares of its Grayscale Bitcoin Trust. These shares had served as collateral for loans extended to Genesis by 232,000 Gemini users through the Gemini Earn program, currently valued at around $1.6 billion.
Genesis faced financial turmoil, leading to its bankruptcy filing in January, which had repercussions on the Gemini Earn program. Consequently, Gemini retaliated by suing Genesis’s parent company, Digital Currency Group (DCG), and its CEO Barry Silbert for fraud in July. In September, Genesis counteracted by suing DCG, seeking the repayment of multiple loans exceeding $600 million. The legal wrangling continues as these crypto heavyweights navigate a complex and contentious landscape.