Gemini Trust lawyers have strongly opposed a recovery plan proposed by Digital Currency Group (DCG) for creditors of Genesis Global. In a filing made on September 15th in the United States Bankruptcy Court for the Southern District of New York, Gemini’s legal team accused DCG of gaslighting Genesis creditors by providing misleading and inaccurate assertions in the recovery plan. The plan, filed on September 13th, claimed that unsecured creditors could potentially recover 70-90% of their funds, with a significant portion of the recovery in digital currencies. Meanwhile, Gemini Earn users could expect a recovery rate of approximately 95-110% for their claims.
Gemini’s lawyers argue that DCG is attempting to lure the Gemini Lenders into accepting a deal that would allow DCG to pay less than what it actually owes. They called for significant improvements to the terms of the loans provided to Genesis, without using Genesis’ bankruptcy proceedings as an excuse for justifying the recovery plan.
The legal battle involves a complex situation involving cryptocurrency exchange Gemini, DCG, and the Gemini Earn program. Genesis suffered financial difficulties following the collapse of FTX in November 2022, which led to the suspension of withdrawals. As a result, Genesis filed for bankruptcy in January 2023.
According to court filings by Gemini, at the time of Genesis’ Chapter 11 filing, the company owed more than $3.5 billion to its top 50 creditors. In May, Gemini filed a claim to recover over $1.1 billion in assets for approximately 232,000 Earn users. Subsequently, the company filed a lawsuit against DCG and CEO Barry Silbert in June, alleging fraud. Gemini co-founder Cameron Winklevoss accused Silbert of being the architect and mastermind behind the fraud against Genesis creditors.
Related Post
In addition, the U.S. Securities and Exchange Commission (SEC) took legal action against Gemini and Genesis in January. The SEC alleged that the two firms had sold unregistered securities through their Earn program. Although Gemini and Genesis filed a motion to dismiss the case in May, it was still ongoing at the time of publication.
The dispute between Gemini Trust and DCG highlights the complexity of the cryptocurrency industry and the challenges faced by users and creditors when dealing with bankruptcies and recovery plans. The involvement of regulatory bodies like the SEC reflects the need for stricter oversight and regulation to protect investors and users in the crypto space.
It is crucial for the bankruptcy court to carefully review the recovery plan proposed by DCG to ensure that it is fair and equitable for all creditors. The court must assess whether the proposed recovery rates are realistic and in line with the actual value of the assets involved. The lawyers representing Gemini Trust argue that the proposed recovery rates are misleading and deceptive, emphasizing the need for a thorough evaluation of the plan.
While the lawsuit between Gemini and DCG continues to unfold, it is essential for investors and users to be cautious when engaging with cryptocurrency platforms and programs. They should conduct due diligence and be aware of the potential risks and uncertainties associated with such investments.
Ultimately, this legal battle highlights the need for stronger regulations and mechanisms to protect investors and users in the cryptocurrency industry. Clear guidelines and oversight can help prevent fraudulent activities and ensure fair treatment for all parties involved in bankruptcy proceedings.
