In a Friday 15 court filing, Gemini, the US-based crypto exchange platform, has accused Digital Currency Group (DCG) of engaging in “fraudulent activities” and attempting to evade responsibility for the harm caused to creditors.
The filing directly responds to a statement made by DCG regarding a proposed agreement between DCG, the debtors, and the Official Committee of Unsecured Creditors.
Gemini Seeks Justice For Creditors Affected By The Collapse Of Genesis
According to Gemini, DCG devised a $1.1 billion promissory note to conceal the significant financial losses caused by the collapse of Three Arrows Capital (3AC).
However, DCG allegedly kept the actual terms of the note “hidden,” leading to misleading representations to Gemini’s creditors. Furthermore, the company claims that DCG borrowed a substantial amount of Bitcoin (BTC) from the company instead of providing much-needed capital.
Gemini also highlights that DCG is now unwilling to repay the more than $630 million it borrowed from the company, which was due several months ago in May.
In response, as reported by NewsBTC, DCG has proposed a deal that would require Genesis creditors, including Gemini, to extend years of credit to DCG. However, Gemini intends to fight against this proposal, asserting that DCG should pay creditors a just and adequate amount.
Gemini argues that DCG has attempted to “wear down” creditors over the past ten months, hoping they would settle for a significant reduction in the amount owed.
According to the court filing, Gemini is determined not to succumb to these tactics and will continue to pursue a fair resolution.
Rejection Of DCG’s Proposed Recovery Rates
In the filing, Gemini criticizes DCG’s proposed recovery rates, claiming they are “misleading and deceptive.” The company argues that receiving fractional shares of interest and principal payments over seven years from a risky counterparty is not equivalent to receiving the actual cash and digital assets owned by Genesis.
Gemini demands that DCG significantly improve the terms of the loans it provides if it wishes to gain the support of the harmed individuals.
Overall, Gemini accuses DCG of being the architect of its subsidiary’s insolvency and “sacrificing” the exchange and its creditors to shield itself from liability.
The company founded by the Winklevoss twins asserts that DCG’s delay tactics have hindered progress in distributing funds to Gemini Lenders, despite Gemini’s offer of a $100 million premium for a swift resolution.
It is worth noting that the court filing by Gemini comes after months of negotiations with the crypto lender and DCG and the collapse of the Gemini Earn program, which resulted in lawsuits and severed ties between Digital Currency Group and the crypto exchange.
Featured image from iStock, chart from TradingView.com
Ronaldo is a seasoned crypto enthusiast with over four years of experience in the field. He is passionate about exploring the vast and dynamic world of decentralized finance (DeFi) and its practical applications for achieving economic sovereignty. Ronaldo is constantly seeking to expand his knowledge and expertise in the DeFi space, as he believes it holds tremendous potential for transforming the traditional financial landscape.
On April 21, 2021, a new lawsuit was filed in New York State Supreme Court related to the alleged fraudulent activities of Digital Currency Group (DCG). The plaintiff is Gemini Exchange, an exchange backed by the Winklevoss twins.
According to the court filing, Gemini Exchange has accused DCG, a venture fund and consulting services provider for the digital currency market, of engaging in a pattern of fraudulent behavior. The complaint notes DCG’s breach of contract, conversion, breach of fiduciary duty, and unjust enrichment. Gemini Exchange’s contention is that DCG failed to provide the agreed-upon services as outlined in the consultancy agreement between the two entities.
Gemini Exchange further alleges that DCG took advantage of its access and confidential information in order to personally benefit from various investments without providing the agreed-upon services. Moreover, Gemini Exchange maintains that it was defrauded for millions of dollars related to the agreement.
This lawsuit is a major development in the digital currency market, and the implications of a successful lawsuit could be far-reaching. If Gemini Exchange is successful in its legal action, it could make it more difficult for venture funds, such as DCG, to attract investment in the evolving digital currency market.
At this point, it is unclear how Gemini Exchange’s accusations will play out in court. It is also unclear how the outcome could affect the broader digital currency market. Nevertheless, Gemini Exchange’s lawsuit is a significant development in a highly monitored industry.