In a recent report, Gemini has accused the Digital Currency Group (DCG), the parent company of Genesis, of presenting a misleading proposal to creditors. The dispute revolves around the recovery rates promised by DCG, which Gemini’s legal team finds disingenuous.
Gemini Trust’s lawyers have presented a strong rebuttal against DCG’s plan in the U.S. Bankruptcy Court for the Southern District of New York. DCG’s proposal suggested recovery rates of 70-90% for unsecured creditors and 95-110% for Gemini Earn users. However, Gemini’s legal representatives claim that DCG’s proposal contains misleading and inaccurate assertions, portraying it as an attempt to manipulate the situation. They argue that the promised recovery rates are far from realistic and lack real value terms, suggesting that DCG’s intention is to pay less than its obligations.
The conflict between Gemini and DCG stems from the Gemini Earn program, which received partial financing from Genesis. Following FTX’s collapse and subsequent market turmoil, Genesis declared bankruptcy in January 2023, leading to the suspension of withdrawals. Court documents reveal that Genesis owes over $3.5 billion to its top 50 creditors. In response, Gemini filed a lawsuit against DCG, seeking to recover $1.1 billion for its Earn users and accusing DCG of fraud.
Gemini co-founder Cameron Winklevoss openly criticized Barry Silbert, DCG’s CEO, as the alleged mastermind behind the deceit. The case took another turn when the U.S. Securities and Exchange Commission filed a civil suit against Gemini and Genesis for potential unregistered securities sales through the Earn program.
The resolution of this legal dispute hinges on a crucial vote by the creditors, which will determine the fate of DCG’s proposal. The outcome of this case is closely watched by the crypto community, eagerly awaiting the conclusion of this contentious battle.