{"id":195299,"date":"2023-10-28T04:10:43","date_gmt":"2023-10-28T04:10:43","guid":{"rendered":"https:\/\/tokenstalk.info\/?p=195299"},"modified":"2023-10-28T04:10:43","modified_gmt":"2023-10-28T04:10:43","slug":"gemini-sues-genesis-over-gbtc-shares-used-as-earn-collateral-now-worth-1-6b","status":"publish","type":"post","link":"https:\/\/tokenstalk.info\/crypto\/gemini-sues-genesis-over-gbtc-shares-used-as-earn-collateral-now-worth-1-6b\/","title":{"rendered":"Gemini sues Genesis over GBTC shares used as Earn collateral, now worth $1.6B"},"content":{"rendered":"

Cryptocurrency exchange Gemini filed an adversary proceeding against bankrupt crypto lender Genesis Global Holdco\u00a0in the Southern District of New York Bankruptcy Court on Oct. 27. At issue is the fate of 62,086,586 shares of Grayscale Bitcoin Trust (GBTC). They were used as collateral to secure loans made by 232,000 Gemini users to Genesis through the Gemini Earn Program. That collateral is currently worth close to $1.6 billion.<\/p>\n

According to the suit, Gemini has received $284.3 million from foreclosing on the collateral for the benefit of Earn users, but Genesis has disputed the action, preventing Gemini from distributing the proceeds.<\/p>\n

<\/p>\n

Genesis has also proposed using the initial value of the collateral, which was more than $800 million, to determine the Earn Users\u2019 deficiency claim rather than the foreclosure value. As the foreclosure value was greater than the initial value, Genesis would thus free up hundreds of millions of dollars for distribution to other creditors:<\/p>\n

\u201cBut it was Gemini who bore the market risk related to the Initial Collateral for the benefit of Earn Users following the foreclosure; so it follows that only Earn Users are entitled to any gain resulting from Gemini taking on that risk.\u201d<\/p><\/blockquote>\n

In addition, the suit alleges that Genesis\u2019 parent company, Digital Currency Group (DCG), transferred additional collateral to Genesis \u201cfor the sole purpose of immediate onward distribution to Gemini for the benefit of Earn Users,\u201d but Genesis is proposing to use the collateral for other purposes. Gemini argued:<\/p>\n

\u201cA determination giving effect to the terms of the Security Agreement, confirming Gemini\u2019s proper foreclosure on the Initial Collateral, and recognizing the Earn Users\u2019 rights to the Additional Collateral would facilitate the return of more than $1 billion in digital assets that Genesis has wrongfully withheld from Earn Users for nearly a year.\u201d <\/p><\/blockquote>\n

Gemini Earn users comprise 99% of Genesis creditors, and their claims represent 28% of all claims by value, according to the suit.<\/p>\n

Related: Court approves Genesis settlement of $175M to FTX, expunges billions in claims<\/em><\/strong><\/p>\n

Genesis filed for bankruptcy in January. It had suspended withdrawals in November 2022, which impacted the Gemini Earn program. Gemini sued DCG and its CEO Barry Silbert for fraud in connection with the Earn program in July.<\/p>\n

The former partners are defendants in a case brought by the United States Securities and Exchange Commission claiming that Gemini Earn offered unregistered securities. New York Attorney General Letitia James sued Gemini, Genesis and DCG, claiming that the Earn program defrauded its users, who included 29,000 New Yorkers. James claimed that Gemini was aware that Genesis was in a risky financial condition. <\/p>\n

Genesis Global Holdco did not respond to Cointelegraph inquiries by publication time. Grayscale is also owned by DCG.<\/p>\n

Magazine: Deposit risk: What do crypto exchanges really do with your money?<\/em><\/strong><\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Cryptocurrency exchange Gemini filed an adversary proceeding against bankrupt crypto lender Genesis Global Holdco\u00a0in the…<\/p>\n","protected":false},"author":4,"featured_media":195298,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\nGemini sues Genesis over GBTC shares used as Earn collateral, now worth $1.6B - Tokens Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/tokenstalk.info\/crypto\/gemini-sues-genesis-over-gbtc-shares-used-as-earn-collateral-now-worth-1-6b\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Gemini sues Genesis over GBTC shares used as Earn collateral, now worth $1.6B - Tokens Talk\" \/>\n<meta property=\"og:description\" content=\"Cryptocurrency exchange Gemini filed an adversary proceeding against bankrupt crypto lender Genesis Global Holdco\u00a0in the...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/tokenstalk.info\/crypto\/gemini-sues-genesis-over-gbtc-shares-used-as-earn-collateral-now-worth-1-6b\/\" \/>\n<meta property=\"og:site_name\" content=\"Tokens Talk\" \/>\n<meta property=\"article:published_time\" content=\"2023-10-28T04:10:43+00:00\" \/>\n<meta name=\"author\" content=\"mediabest\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/tokenstalk.info\/wp-content\/uploads\/2023\/10\/Gemini-sues-Genesis-over-GBTC-shares-used-as-Earn-collateral-now-worth-1.6B.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"mediabest\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/tokenstalk.info\/crypto\/gemini-sues-genesis-over-gbtc-shares-used-as-earn-collateral-now-worth-1-6b\/\",\"url\":\"https:\/\/tokenstalk.info\/crypto\/gemini-sues-genesis-over-gbtc-shares-used-as-earn-collateral-now-worth-1-6b\/\",\"name\":\"Gemini sues Genesis over GBTC shares used as Earn collateral, now worth $1.6B - 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