Bankrupt Genesis alleges Gemini contributed to ‘run on the bank’ with $689M withdrawals Bankrupt Genesis alleges Gemini contributed to ‘run on the bank’ with $689M withdrawals
The two firms have been involved in an extensive legal battle during the past year.
2 min read
Updated: Nov. 22, 2023 at 12:34 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Bankrupt crypto lender Genesis has filed legal actions to retrieve $689.3 million from cryptocurrency exchange Gemini.
In a Nov. 21 court filing, the bankrupt lender alleged that Gemini contributed to the “run on the bank” it suffered by making these preferential transfers during a 90-day period that preceded its bankruptcy filing.
According to the lender, this allowed the exchange to gain an unfair advantage over its other creditors. So, it wants the court to correct “this unfairness and return Defendants (Gemini) to the same position as Plaintiffโs other similarly-situated creditors.”
Gemini has yet to respond to CryptoSlateโsย request for comment as of press time.
Gemini vs. Genesis public spat
This lawsuit continues a highly publicized dispute between the two former business partners during the past year.
Gemini and Genesis once had an extensive business relationship involving the defunct Gemini Earn investment program that allowed the exchange users to earn interest from lending money to Genesis, who also lent it to others.
However, their dealings went sour after Genesis abruptly halted withdrawals last year following the collapse of the crypto exchange FTX. Genesis subsequently filed for bankruptcy in January.
Since then, Gemini has filed legal actions against the parent company of the lender Digital Currency Group (DCG) and CEO Barry Silbert, alleging that it knew the lender had been bankrupt since 2022 but failed to inform investors.
Besides that, the exchange has also filed legal actions against Genesis, seeking toย recover $1.6 billion from the bankrupt lender.
Meanwhile, U.S. regulators, including the Securities and Exchange Commission (SEC) and New York Attorney General (NYAG), have also filed legal actions against the two firms.
The SEC alleges that the companies sold unregistered securities through the Earn program. On the other hand, the NYAG claimed that the firms defrauded investors of over $1 billion through the defunct investment program.
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Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Gemini
Gemini is a regulated digital asset exchange and custodian that allows customers to buy, sell, store, and stake digital assets in a regulated, secure, and compliant manner.
Genesis
Genesis is an institutional digital asset markets and a full-service digital currency prime brokerageย providing a single point of access for select qualified individuals and global institutional investors.
Digital Currency Group
Digital Currency Group’s mission is to accelerate the development of a better financial system.
Barry Silbert, recognized as a foundational figure in the cryptocurrency landscape, serves as the CEO and founder of Digital Currency Group (DCG).