Crypto exchange Gemini has recently taken legal action against Genesis Global over the ownership of shares in the Grayscale Bitcoin (BTC) Trust (GBTC). In its lawsuit, Gemini is requesting a federal judge to affirm that Genesis does not have any rights to more than 60 million ($1.6 billion) GBTC shares that were used as collateral for loans taken by its users.
Furthermore, Gemini argues that these shares should not be utilized to repay other creditors of Genesis. Gemini noted that Genesis pleaded to deliver the GBTC shares to secure loans made by Gemini users as part of its Gemini Earn Program.
The outcome of this legal battle holds significant implications for both Gemini and Genesis. As a reputable crypto exchange, Gemini fully intends to protect the interests of its users and ensure that their pledged assets are rightfully administered.
Gemini and Genesis at Loggerhead Over Earn Product
Gemini has been making efforts to ensure that users of its Earn product are able to redeem their funds. The Winklevoss-owned exchange collaborated with Genesis and the parent company Digital Currency Group (DCG) to develop strategies that will influence a refund for users.
Additionally, an ad hoc committee was inaugurated to take up the settlement but it did not yield a positive result. After a tiring delay, Cameron Winklevoss co-founder of Gemini sent a letter to Barry Silbert, CEO of DCG stating that he has “bad faith stall tactics” citing his refusal to release Earn funds which were entrusted to him.
Earn Program has Ended
Users of Earn have been subject to withdrawal restrictions since mid-November 2022 as a result of Genesis filing for bankruptcy after being sued by the Securities and Exchange Commission (SEC) in January. Gemini responded by submitting a thorough claim in May with the goal of recovering nearly $1.1 billion in assets for 232,000 Earn members.
Winklevoss stated earlier this year that Gemini had finally ended its Earn Program. Meanwhile, a founding partner of JFB Legal, who represents the crypto exchange, Jack Baughman, said in a tweet that the SEC’s litigation is just making it more difficult and challenging to recover assets from the Genesis bankruptcy in order to make Earn users whole.
Gemini demands Funds from DCG
In July, Winklevoss made a final offer to the founder of DCG demanding that the latter should settle an overall debt of $1.46 billion or face a lawsuit. Gemini’s co-founder noted that the proposal is fair and reasonable for everyone and represents the floor that creditors, who are required to support a deal, will accept.