Genesis Creditor Gemini Sues Parent Company Digital Currency Group, CEO

Cryptocurrency exchange Gemini, the largest creditor of bankrupt crypto lending firm Genesis, sued parent company Digital Currency Group (DCG) and its CEO, the day after DCG missed the exchange's deadline for agreeing to a restructuring deal for the venture capital firm's troubled unit.

DCG and Gemini, two prominent players in the crypto industry, have clashed several times over the past few months following the collapse of Genesis, which filed for bankruptcy in January. 

The lawsuit alleges DCG and its CEO Barry Silbert misrepresented the accounting treatment of certain liabilities that DCG assumed from Genesis as a result of losses Genesis suffered from the collapse of Singapore-based crypto hedge fund Three Arrows Capital in June 2022. 

In a statement, a DCG spokesperson said it expects to soon bring the Genesis bankruptcy case to a close. 

"Any suggestion of wrongdoing by DCG or any of its employees is baseless, defamatory, and completely false. From day one, DCG has remained committed to reaching an amicable solution for all parties to the Genesis bankruptcy," the spokesperson said. 

The dispute between Gemini and DCG came to a head earlier this week after Gemini set a deadline for DCG to agree to a restructuring deal by Thursday afternoon. Gemini's co-founder Cameron Winklevoss had said that after that deadline, his company would sue DCG and Silbert.

Although the lending unit of Genesis had initially outlined a plan to exit bankruptcy by May, it has yet to reach an agreement on a restructuring plan with creditors, to whom it owes more than $3 billion (nearly Rs. 24,800 crore), according to court filings. Gemini is seeking to recoup more than $1.1 billion (nearly Rs. 9,100 crore) from Genesis. 

© Thomson Reuters 2023