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<\/p>\nLawyers representing Gemini Trust have pushed back against a plan proposed by Digital Currency Group (DCG) for creditors of Genesis Global.<\/p>\n
In a Sept. 15 filing in the United States Bankruptcy Court for the Southern District of New York, the legal team accused DCG of gaslighting Genesis creditors through \u201ccontrived, misleading, and inaccurate assertions\u201d in the recovery plan. The plan, filed in bankruptcy court on Sept. 13, claimed that unsecured creditors could have a \u201c70\u201390% recovery with a meaningful portion of the recovery in digital currencies\u201d while Gemini Earn users could expect an \u201capproximately 95\u2013110%\u201d recovery for their claims.<\/p>\n
According to the legal team, DCG was attempting to \u201cbait the Gemini Lenders into accepting a deal\u201d that would allow the company to pay less than it allegedly owed. Lawyers called on the firm to \u201csignificantly improve the terms of the loans\u201d provided to Genesis and not use Genesis\u2019 bankruptcy proceedings as cover for justifications in the recovery plan.<\/p>\n
\u201cTo distract the Genesis creditors from the inconvenient facts of its facially inadequate and inequitable proposal, DCG touts proposed recovery rates that are a total mirage \u2014 misleading at best and deceptive at worst,\u201d said the Sept. 15 filing. \u201cMake no mistake: Gemini Lenders will not actually receive anything close in real value terms to the proposed recovery rates under the current \u2018agreement in principle.\u2019\u201d<\/p>\n
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The legal battle involved entanglements with cryptocurrency exchange Gemini and DCG over the Gemini Earn program, financed in part by Genesis. Genesis halted withdrawals in November 2022 in the wake of FTX\u2019s collapse, citing \u201cunprecedented market turmoil\u201d at the time, and filed for bankruptcy in January 2023.<\/p>\n
Related: <\/em><\/strong>DCG reaches \u2018agreement in principle\u2019 with Genesis creditors, debtors<\/em><\/strong><\/p>\n According to court filings by Gemini, Genesis owed more than $3.5 billion to its top 50 creditors at the time of its Chapter 11 filing. The crypto exchange filed a claim in May aimed at recovering more than $1.1 billion in assets for roughly 232,000 Earn users and filed a lawsuit against DCG and CEO Barry Silbert in June, alleging fraud. <\/p>\n \u201cBarry was not only the architect and mastermind of the DCG and Genesis fraud against creditors, he was directly and personally involved in perpetrating it,\u201d said Gemini co-founder Cameron Winklevoss in June.<\/p>\n The U.S. Securities and Exchange Commission filed a civil suit against Gemini and Genesis in January for allegedly selling unregistered securities through the Earn program. The two firms filed a motion to dismiss the case in May, but it was still ongoing at the time of publication.<\/p>\n