Genesis Global has launched a lawsuit against Gemini Trust Co, with the aim of reclaiming a hefty $689 million. This figure represents the withdrawals made by clients during a crisis that led to Genesis’s financial downfall and subsequent bankruptcy filing.
The legal claim, submitted to a New York federal bankruptcy court, indicates that as many as 230,000 investors in the collaborative “Earn” program withdrew in excess of half a billion dollars from Genesis in the 90 days preceding its January insolvency filing. According to U.S. bankruptcy statutes, such disbursements may be subject to reversal to allow for a fairer allocation of assets to all debt holders.
In response, Gemini, under the leadership of the Winklevoss twins, has voiced its opposition on Wednesday, insisting that clients should be fully compensated rather than having their funds recouped. Gemini’s statement emphatically criticized the move: “This attack on Earn Users is a new low, even for Genesis.”
The operational agreement between the two companies entailed Genesis borrowing digital assets from Earn’s clientele to reinvest and return interest, while Gemini managed the custody and facilitation of these transactions.
As it forges ahead with its bankruptcy liquidation strategy, Genesis is working on a plan that would return a portion of the cryptocurrency to its clients, though it does not settle the outstanding legal contentions. Moreover, Genesis, its parent company DCG, and Gemini are all facing legal actions from the U.S. Securities and Exchange Commission and the New York Attorney General, accused of swindling investors out of over a billion dollars.
