U.Today - has initiated legal action against Gemini Trust in significant development within the cryptocurrency industry. The , seeks to recover a substantial sum of $689 million. Genesis claims these funds represent 'preferential transfers' made by Gemini. According to Genesis, these actions placed other creditors at a disadvantage, a situation they now wish to rectify legally.
This legal battle is not isolated but part of a broader context of disputes between major players in the cryptocurrency world. This conflict gained momentum following the collapse of the , leading to a series of lawsuits for fund recovery. Gemini had taken legal action against Genesis's parent company, Digital Currency Group (DCG), over allegations it labeled as defamatory. Subsequently, Genesis turned the tables by suing DCG to reclaim loans exceeding $600 million, backed by Grayscale Bitcoin Trust shares.
Genesis alleges Gemini exacerbated financial strain
The complexity of this situation extends beyond corporate entities to involve U.S. regulatory bodies. Before declaration, the U.S. Securities and Exchange Commission charged Genesis and Gemini with selling unregistered securities. Adding to the legal maelstrom, New York Attorney General Letitia James filed a lawsuit against DCG, Genesis, and Gemini, citing fraud against many investors.Central to Genesis's lawsuit is the claim that during a period of market instability, Gemini initiated substantial withdrawals. According to Genesis, these actions exacerbated the financial strain, leading to a 'run on the bank' scenario. Specifically, in the 90-day preference period, Gemini's demand for loan repayments from Genesis, now argued as avoidable, is under scrutiny. Genesis contends that these transactions occurred under the shadow of its insolvency.
The fallout from Genesis's bankruptcy had a ripple effect across the cryptocurrency sector. Notably, the Gemini Earn program was impacted, leading to further legal action against DCG and its CEO, Barry Silbert.