Gemini, a United States-based cryptocurrency exchange, has initiated legal action against Digital Currency Group (DCG) and its CEO, Barry Silbert, accusing them of committing fraud against creditors.
In a court filing on July 7, Gemini claimed that DCG and Silbert were involved in a scheme where they provided substantial amounts of cryptocurrency and U.S. dollars to Genesis, a crypto lending firm. The lawsuit aims to recover funds lost due to alleged false representations and omissions made by DCG and Silbert to Gemini. Additionally, Gemini plans to pursue legal remedies in Genesis’ ongoing bankruptcy case.
Genesis had previously operated an Earn program in partnership with Gemini but suspended withdrawals in November 2022, citing market turbulence, before eventually filing for Chapter 11 bankruptcy. According to Cameron Winklevoss, co-founder of Gemini, Silbert was aware of Genesis’s dire financial situation, describing it as “massively insolvent,” yet still attempted to continue the Earn program. Winklevoss accused DCG, Silbert, and Genesis of orchestrating a deception by creating false financial reports to conceal the truth from Gemini and other creditors.
The complaint filed by Gemini alleges that the fraudulent activity involving DCG and Silbert started with the collapse of Three Arrows Capital in June 2022, which caused significant damage to Genesis’s balance sheet amounting to $1.2 billion. Winklevoss stated that the fraud extended to the highest levels, with Silbert and other DCG executives actively participating in these deceptive practices.
This lawsuit marks an ongoing development, and further details will be provided as they emerge.