Gemini Accuses DCG of Fraud: Cryptocurrency Exchange Files Lawsuit

Gemini Accuses DCG of Fraud in Ongoing Legal Battle


Gemini, the cryptocurrency exchange founded by brothers Tyler and Cameron Winklevoss, continues to accuse Barry Silbert’s Digital Currency Group (DCG) of fraud.

According to the court filing, filed on September 15, Gemini claims that DCG is trying to avoid accountability for damages to victims of its Earn product.

“DCG continues its campaign of contrived, misleading, and inaccurate assertions in an attempt to cast light on Genesis’ property creditors generally, and Gemini’s lenders specifically, and escape liability for the harm it has caused them,” Gemini Legal Advisors, New York-based Hughes Hubbard & Reed LLP said. And its headquarters.

This legal action taken by Gemini is a direct response to a recent statement by DCG regarding a proposed agreement involving the latter, the debtors and the official committee of unsecured creditors.

Gemini’s allegations focus on DCG’s creation of a $1.1 billion promissory note, which Gemini claims was an attempt to hide significant financial losses resulting from the collapse of Three Arrows Capital (3AC). These allegations raise concerns about transparency and financial integrity in the cryptocurrency space, especially as regulatory scrutiny of the industry continues to intensify.

Gemini asserts that DCG intentionally concealed the true terms of the promissory note, resulting in the transmission of misleading information to Gemini’s creditors.

Additionally, Gemini asserts that DCG borrowed a large amount of Bitcoin (BTC) from Gemini instead of delivering the expected capital. These allegations deepen the legal dispute and cast a shadow over the actions of a major player in the cryptocurrency space.

Adding to the legal standoff, Gemini asserts that DCG has yet to meet its obligation to repay more than $630 million it borrowed from its company, and the repayment deadline was already months due.

DCG responds to Gemini

In response to these allegations, DCG filed a proposal involving Genesis’ creditors, including Gemini, to extend credit to DCG over several years. However, Gemini made it clear that it would object to this proposal, and strongly advocated that DCG should fulfill its obligations by providing creditors with a fair and just amount.

Gemini also accused DCG of using a strategy over the past 10 months to wear down creditors to convince them to accept a reduced settlement amount. Despite these tactics, Gemini remains firm and determined to seek a fair solution rather than give in to these pressures.

According to the lawsuit, Gemini is demanding significant improvements to the terms of DCG’s loans if it intends to obtain support from the affected parties. Furthermore, Gemini also accuses DCG of taking responsibility for the bankruptcy of its subsidiary and sacrificing both the stock exchange and its creditors to protect itself from liability.

It is important to note that Gemini’s filing with the court comes after months of negotiations with DCG and follows the collapse of the Gemini Earn program. The program’s demise sparked legal disputes and a severing of ties between the cryptocurrency group and the cryptocurrency exchange.

Cryptocurrency exchanges are facing regulatory scrutiny

In January 2023, the US Securities and Exchange Commission (SEC) charged Genesis Global Capital LLC and Gemini Trust Company LLC with the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program, which subsequently left investors in limbo.

The SEC alleges that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors.

Through this unregistered offering, Genesis and Gemini raised billions of dollars worth of crypto assets from hundreds of thousands of investors who were promised high returns on deposits.

However, Genesis later froze withdrawals, leaving Earn customers in limbo.

In June 2023, the SEC also charged Coinbase with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency, as well as failing to record the offer and sale of shares of its crypto assets as underlying value. Service program.

Other centralized cryptocurrency trading venues, including Changpeng Zhao’s Binance and Kraken, have drawn the ire of the Gary Gensler-led watchdog in recent months.

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