Gemini legal team accuses DCG of ‘gaslighting’ Genesis creditors

Attorneys representing Gemini Trust have pushed back against a plan proposed by Digital Currency Group (DCG) for lenders of Genesis Global.In a Sept. 15 filing in the United States Bankruptcy Court for the Southern District of New York, the legal group implicated DCG of gaslighting Genesis lenders through “contrived, deceptive, and unreliable assertions” in the healing plan. The plan, filed in bankruptcy court on Sept. 13, declared that unsecured creditors might have a “70– 90% healing with a significant portion of the healing in digital currencies” while Gemini Earn users might anticipate an “approximately 95– 110%” healing for their claims.According to the legal group, DCG was trying to “bait the Gemini Lenders into accepting an offer” that would permit the business to pay less than it apparently owed. Legal representatives gotten in touch with the firm to “considerably improve the terms of the loans” supplied to Genesis and not use Genesis insolvency proceedings as cover for justifications in the recovery strategy.”To sidetrack the Genesis lenders from the troublesome truths of its inequitable and facially insufficient proposition, DCG promotes proposed recovery rates that are a total mirage– misguiding at best and misleading at worst,” said the Sept. 15 filing. “Make no error: Gemini Lenders will not really receive anything close in genuine value terms to the proposed recovery rates under the current arrangement in principle.”Sept. 15 filing in U.S. Bankruptcy Court for the Southern District of New York. Source: CourtListenerThe legal battle involved entanglements with cryptocurrency exchange Gemini and DCG over the Gemini Earn program, funded in part by Genesis. Genesis stopped withdrawals in November 2022 in the wake of FTXs collapse, pointing out “extraordinary market turmoil” at the time, and declared insolvency in January 2023. Related: DCG reaches arrangement in principle with Genesis financial institutions, debtorsAccording to court filings by Gemini, Genesis owed more than $3.5 billion to its top 50 financial institutions at the time of its Chapter 11 filing. The crypto exchange sued in May focused on recovering more than $1.1 billion in properties for approximately 232,000 Earn users and filed a suit against DCG and CEO Barry Silbert in June, declaring scams. “Barry was not just the designer and mastermind of the DCG and Genesis scams versus lenders, he was directly and personally included in perpetrating it,” stated Gemini co-founder Cameron Winklevoss in June.The U.S. Securities and Exchange Commission submitted a civil fit versus Gemini and Genesis in January for allegedly offering unregistered securities through the Earn program. The two firms submitted a movement to dismiss the case in May, but it was still continuous at the time of publication.Magazine: Deposit threat: What do crypto exchanges truly do with your cash?

Other Questions People Ask

What allegations did the Gemini legal team make against DCG regarding Genesis creditors?

The Gemini legal team accused DCG of "gaslighting" Genesis creditors by making "contrived, deceptive, and unreliable assertions" in their proposed recovery plan. They argued that DCG's claims of potential recovery rates for creditors were misleading and served to distract from the reality of the situation. The attorneys emphasized that the proposed terms were inadequate and urged for a significant improvement in the loan terms offered to Genesis creditors.

How did the proposed recovery plan by DCG affect Genesis creditors according to Gemini's legal team?

According to Gemini's legal team, the proposed recovery plan by DCG suggested that unsecured creditors could expect a recovery of "70-90%" while Gemini Earn users might see "approximately 95-110%" recovery. However, they contended that these figures were a "total mirage," indicating that actual recoveries would be far less than what was promised. The legal representatives warned that accepting such offers would allow DCG to pay significantly less than what they owed to the creditors.

What was the context behind the legal battle involving Gemini, DCG, and Genesis?

The legal battle arose after Genesis halted withdrawals in November 2022 due to market turmoil following the collapse of FTX and subsequently filed for bankruptcy in January 2023. At that time, Genesis owed over $3.5 billion to its top creditors, prompting Gemini to seek recovery of more than $1.1 billion for its Earn users. The situation escalated with Gemini filing lawsuits against both DCG and its CEO Barry Silbert, alleging fraud and misconduct in handling the crisis.

What specific actions did Gemini's legal team request from DCG regarding the recovery plan?

Gemini's legal team requested that DCG significantly improve the terms of the loans provided to Genesis creditors rather than using the bankruptcy proceedings as a cover for inadequate recovery offers. They urged DCG to provide more realistic and fair terms that reflect the true value owed to creditors. The attorneys highlighted the need for transparency and accountability in the recovery process to ensure that creditors are not misled by inflated recovery claims.

What implications does the ongoing legal dispute have for Gemini Earn users?

The ongoing legal dispute has significant implications for Gemini Earn users, as they are directly affected by the proposed recovery rates and overall handling of the bankruptcy case. If the claims made by Gemini's legal team are validated, it could lead to better recovery terms for Earn users who are currently facing uncertainty regarding their investments. The outcome of this legal battle may also set a precedent for how similar cases are handled in the cryptocurrency industry, impacting user trust and future investments.