- Investors are blaming Gemini for the failed joint Earn Program with Genesis.
- On the other hand, the SEC is accusing both firms of flaunting securities laws.
US-based cryptocurrency exchange Gemini – founded by twin brothers Cameron Winklevoss and Tyler Winklevoss – is embroiled in a fresh tussle with Genesis Capital’s parent company DCG after the crypto lender (Genesis) filed for bankruptcy protection.
Cameron Winklevoss said on Jan. 20 that his company was preparing a lawsuit against DCG and its CEO Barry Silbert, among others, who are responsible for – ‘‘fraud that has caused harm to the 340,000 plus Earn users and others duped by Genesis and its accomplices.’’ Winklevoss is now asking DCG to make a fair offer to Gemini’s creditors to avoid legal action.
Gemini gave $900 million to Genesis Capital, DCG’s subsidiary, under its Earn program (high-yield interest-bearing accounts launched in 2021) in an arrangement that allowed Genesis to loan the funds to other crypto firms.
However, Genesis had to suspend customer withdrawals in November last year following a series of bad investments, including those in Three Arrows Capital and FTX. The exchange is now facing pressure after being sued by investors who could not access their funds from the Earn Program.
Lawsuits and Countersuits Pitting the Two Firms and the Regulator
The tussles have led to a war of words between the executives of the two companies – Winklevoss and Silbert – over who should bear the responsibility for the lost funds. In a report by ZyCrypto at the beginning of the month, Winklevoss posted an open letter accusing his DCG counterpart of causing liquidity problems at Genesis Capital by failing to repay a $1.675 billion loan, claims Silbert denies.
According to Winklevoss, Silbert and his company DCG were acting in bad faith by refusing to come up with a solution for the repayment of funds. Winklevoss further accuses the 46-year-old billionaire of investing the funds in failed share buybacks, illiquid venture investments, and ‘ ‘Kamikaze Grayscale NAV trades,’’ to the detriment of the investors.
Besides, the SEC filed a complaint against both firms – Gemini and Genesis – at the start of the month, accusing them of offering unregistered securities in the Earn Program. According to the complaint, the alleged violation denied the investing public the necessary information to mitigate their risks.
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- Source: https://zycrypto.com/gemini-vows-legal-action-against-genesis-parent-company-amidst-bankruptcy-filing/