Gemini, one of the leading cryptocurrency exchanges, has filed a lawsuit against Digital Currency Group (DCG) and its CEO, Barry Silbert, following DCG’s failure to meet Gemini’s deadline for a restructuring deal related to the troubled crypto lending firm, Genesis.
Genesis, which declared bankruptcy in January, named Gemini as its largest creditor. Since then, conflicts have arisen between DCG and Gemini, both prominent players in the crypto industry.
The lawsuit accuses DCG and Barry Silbert of misrepresenting the accounting treatment of certain liabilities that DCG assumed from Genesis. These liabilities stemmed from losses incurred by Genesis due to the collapse of the Singapore-based crypto hedge fund, Three Arrows Capital, in June 2022.
A spokesperson for DCG responded to the lawsuit, expressing confidence in bringing the Genesis bankruptcy case to a close. The spokesperson vehemently denied any wrongdoing by DCG or its employees, stating that the allegations of misconduct were baseless and defamatory. DCG emphasized its commitment to finding a fair resolution for all parties involved in the Genesis bankruptcy.
The dispute between Gemini and DCG escalated when Gemini set a deadline for DCG to agree to a restructuring deal, which expired on Thursday. Cameron Winklevoss, co-founder of Gemini, had previously stated that his company would take legal action against DCG and Barry Silbert if the deadline was not met.
While Genesis had initially proposed an exit from bankruptcy by May, it has yet to reach a consensus on a restructuring plan with its creditors, to whom it owes over $3 billion. Gemini is seeking to recover more than $1.1 billion from Genesis as part of the ongoing proceedings.
The lawsuit between Gemini and DCG highlights the complexities and challenges faced by the crypto industry, particularly in the context of bankruptcies and restructuring efforts. As the legal battle unfolds, the outcome will have significant implications for the parties involved and may influence the future of cryptocurrency lending and related financial practices.