Cryptocurrency exchange Gemini has filed a $1.6 billion lawsuit against Genesis Global Holdco, LLC (Genesis) and its parent company Digital Currency Group (DCG), alleging that the companies failed to deliver 60 million Grayscale Bitcoin Trust (GBTC) shares that were pledged as collateral for a loan program.1
The lawsuit, filed in the United States Bankruptcy Court for the Southern District of New York, alleges that Genesis and DCG engaged in fraudulent conduct and breached their contractual obligations by refusing to deliver the GBTC shares. Gemini is seeking to recover the full value of the GBTC shares, which is currently estimated to be approximately $1.6 billion.
The GBTC shares were pledged as collateral for Gemini’s Earn program, which allowed users to lend their cryptocurrency to Genesis in exchange for interest payments. However, in January 2023, Genesis suspended withdrawals from the Earn program, citing market volatility.
Gemini has since been working to recover the GBTC shares from Genesis, but the company has refused to cooperate. As a result, Gemini has been forced to file this lawsuit to protect its customers’ interests.
The lawsuit is the latest development in an ongoing dispute between Gemini and Genesis.
In September 2023, Genesis and DCG proposed a remuneration deal that would have compensated Gemini Earn customers with a combination of cash, GBTC shares, and a new cryptocurrency token. However, Gemini rejected the deal, calling it “unfair and unacceptable.”
The filing of this lawsuit is a major escalation in the dispute and could have significant implications for the cryptocurrency industry. If Gemini is successful in its lawsuit, it could force Genesis and DCG to pay out billions of dollars in damages. This could have a ripple effect throughout the industry, as other companies may be forced to reassess the risks of doing business with Genesis and DCG.
Gemini stands as a cryptocurrency exchange facilitating the purchase, sale, storage, and earning of cryptocurrencies for both individuals and institutions.
Operating under the regulatory oversight of the New York State Department of Financial Services (NYDFS), Gemini holds the status of a New York trust company.
