Bankrupt Crypto Lender Genesis Global and Crypto exchange Gemini have locked horns again in a legal battle. Genesis Global Capital has filed a lawsuit against Gemini to recover a mammoth $689 million in preferential treatments, the court filings have revealed.
The allegations made against Gemini state that the company withdrew a gross amount of approximately $689,302,000 during the 90 days before Genesis filed for bankruptcy back in January of 2023. The withdrawal was made at the expense of other creditors by Gemini, which Genesis is now trying to recover. Genesis’ regal representation is asking the courts to use precedence provided by the United States Bankruptcy Code to modify the situation where the Defendants are being treated unfairly and asks the court to return them to the “same position as the Plaintiff’s other similarly situated creditors.”
Ever since the collapse of the FTX crypto exchange, the two crypto powerhouses have been involved in a public spat over the recovery of these funds. The situation escalated when Genesis decided to sue Gemini as they believed that Gemini illegally and unlawfully had acquired these funds.
The CEO of the two companies have also been very vocal in their disapproval of how the other company is behaving in this matter and has accused each other of facing legal consequences for their non-cooperation in this matter.
Back in October of 2023, the Gemini cryptocurrency exchange took legal action against Genesis Global in the Southern District of New York Bankruptcy Court. The dispute revolved around the destiny of 62,086,586 shares of Grayscale Bitcoin Trust (GBTC), which were used as collateral for loans given by 232,000 Gemini users to Genesis through the Gemini Earn Program. These shares are currently valued at nearly $1.6 billion.
Gemini claimed to have received $284.3 million by seizing the collateral to benefit the users of the Earn program. However, Genesis has contested this action, preventing Gemini from distributing the funds to the users as intended.
Genesis declared bankruptcy in January of this year after halting withdrawals in November 2022. This bankruptcy hurt the Gemini Earn program, prompting the cryptocurrency exchange to file a fraud lawsuit in July against Genesis’ parent company, Digital Currency Group (DCG), and its CEO, Barry Silbert. Additionally, in September, Genesis took legal action against DCG, seeking the repayment of several loans totalling over $600 million.
The crypto world is keeping a very close eye on the proceedings of this matter and is wondering whether this legal dispute will be resolved peacefully or whether it is getting primed to witness more twists and turns in this ongoing legal battle between two Crypto giants.
