Class action against Genesis from Gemini clients

62d9328a-86d5-4357-ae41-68c8122a0183

Written by

Edna Buckley
Published on

January 3, 2023

Key points: 

  • In November, Genesis Trading's lending arm, Genesis Global Capital [GGC], suspended redemptions.
  • Then, in December, it was reported that the lender’s parent company, Digital Currency Group [DCG], was trying to raise funds to save Genesis’ sinking ship.
  • Now, three users of Gemini Earn have filed a class action lawsuit against GGC and DCG. 
  • This is in response to Gemini suspending its Earn redemption program due to Genesis freezing its payouts.
  • The plaintiffs allege that Genesis failed to return their digital assets as required by the master agreement between them.

Genesis' wounds deepened with each passing day. In November, Genesis Trading's lending arm, Genesis Global Capital [GGC], suspended redemptions. The company immediately applied for a $1 billion emergency loan thereafter. It also warned that it would go bankrupt without financial support.

By the end of the month, the company was in talks with restructuring lawyers to avoid bankruptcy. Then, in December, it was reported that the lender’s parent company, Digital Currency Group [DCG], was trying to raise funds to save Genesis’ sinking ship. This was allegedly done "in part" to prevent the immediate repayment of the Todd Boley Investments loan.

Genesis' problems keep piling up

Now, there's more to the woes of cryptocurrency lenders. Three users of Gemini Earn have filed a class action lawsuit against GGC and DCG. This is in response to Gemini suspending its Earn redemption program due to Genesis freezing its payouts.

The plaintiffs allege that Genesis failed to return their digital assets as required by the master agreement between them. In addition, they allege that Genesis first violated the master agreement when it went bankrupt in the summer of 2022, but hid the fact of bankruptcy from customers.

The document further adds,

GGC concealed the insolvency in part, the demand alleges, by orchestrating a sham transaction with its parent company, DCG, whereby DCG “bought” the right to collect a $2.3 billion debt owed to GGC by insolvent hedge fund Three Arrows Capital for a promissory note of $1.1 billion due in 2033.

There is another parallel class action lawsuit against the cryptocurrency lender and its founders, the Winklevoss twins. They were sued by investors alleging that the exchange sold interest-bearing accounts that were not registered as securities. In particular, investors have accused the company and its founders of fraud and violations of securities exchange laws. The proposed class action has been filed in Manhattan federal court.

Additionally, Gemini’s Cameron Winklevoss and DCG CEO Barry Silbert had a feud on Twitter a day earlier. The former accused the latter of adopting "malicious delaying tactics".


From the blog

The latest industry news, interviews, technologies, and resources.

Comprehensive Btcman guide to show the perks and propositions of pragmatic play provider💲One of the most famouse in the casino gaming industry

Overview on slots, bonuses, software and features of Pragmatic Play

Comprehensive Btcman guide to swing trading crypto strategies, bots, taxes, platforms, and indicators for profiting from medium-term price moves.

Photo of Swing Trading Crypto ➤ Riding the Waves for Profit
View all posts