Gemini sues Digital Currency Group and CEO Barry Silbert over Genesis Capital insolvency

Cryptocurrency exchange Gemini, founded by the Winklevoss twins, has filed a civil lawsuit against Digital Currency Group (DCG) and its CEO Barry Silbert. The lawsuit is rooted in a dispute over the insolvency of Genesis Capital, a firm with which Gemini had a significant business partnership.

Gemini co-founder Cameron Winklevoss announced the suit on social media, along with several allegations of fraud and foul play against Silbert for his role in hiding the troubles at Genesis.

DCG said in a statement that the allegations and the lawsuit are a “publicity stunt” by the Winklevoss twins to dodge responsibility for running the Gemini Earn program.

The firm said the allegations made against it and its employees are “baseless, defamatory, and completely false.” DCG added that it remains committed to finding an amicable solution for all parties involved in the bankruptcy proceedings.

The allegations

Winklevoss said the collapse of Three Arrows Capital “blew a $1.2 billion hole” in Genesis’ balance sheet — making it “wildly insolvent” as early as June 2022. However, instead of alerting investors and creditors, the firm hid this fact with the help of DCG and Silbert.

Said Winklevoss:

“Barry, DCG, and Genesis all conspired to create false financial reports to hide the truth from Gemini and creditors.”

Winklevoss claimed that the principal “architect and mastermind” of this “fraud” was Silbert and that the top leadership at DCG was aware and involved in “hiding the truth.”

The exchange facilitated its Earn program in collaboration with Genesis. However, when Genesis became insolvent, it halted withdrawals, effectively locking up approximately $1.45 billion worth of assets belonging to users of the Gemini Earn program

The exchange decided to end the program and asked DCG to repay the debt over five years.

According to the Gemini founder, Silbert directly intervened and tried to dissuade Gemini from ending its Earn program with Genesis despite knowing the company was essentially bankrupt. Silbert told the exchange the troubles

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Author: Assad Jafri

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