United States-based cryptocurrency exchange Gemini has announced legal action against the conglomerate Digital Currency Group (DCG) and its CEO Barry Silbert, claiming “fraud against creditors”.
In a July 7 filing in a New York court, Gemini alleged DCG and Silbert engaged in a scheme involving lending “huge amounts of cryptocurrency and U.S. dollars” to Genesis. According to the filing, Gemini seeks to recover funds incurred as a result of “DCG’s and Silbert’s false, misleading, and incomplete representations and omissions to Gemini, and Defendants’ role in encouraging and facilitating Genesis’s fraud against Gemini”, adding the firm would also pursue legal avenues in Genesis’ bankruptcy case.
Genesis had been the crypto lender responsible for operating an Earn program in partnership with Gemini. However, the firm halted withdrawals in November 2022, citing “unprecedented market turmoil” and subsequently filed for Chapter 11 bankruptcy.
According to a July 7 Twitter thread from Gemini co-founder Cameron Winklevoss, Silbert knew Genesis was “massively insolvent” when attempting to continue the Earn program. The complaint included alleged false financial reporting from DCG and Silbert starting with the collapse of Three Arrows Capital in June 2022, which “blew a $1.2 billion hole in Genesis’s balance sheet”.
“Barry, DCG, and Genesis all conspired to create false financial reports to hide the truth from Gemini and creditors,” claimed Winklevoss. “This fraud goes to the very top. Barry Silbert and other DCG executives were directly involved in these lies and they lied again and again to conceal the truth from Gemini and other creditors.”
1/ Today, @Gemini filed a lawsuit against @DCGco and @BarrySilbert personally in New York court. Barry was not only the architect and mastermind of the DCG and Genesis fraud against creditors, he was directly and personally involved in perpetrating it.
— Cameron Winklevoss (@cameron) July 7, 2023
This is a developing story, and further information will be added as it becomes available.
