Gemini Sues Digital Currency Group and Barry Silbert for Fraud
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Gemini Trust Company has filed a lawsuit against Digital Currency Group (DCG) and its CEO, Barry Silbert, accusing them of fraud.
According to the complaint, DCG and Silbert misrepresented and omitted information to Gemini in a deceptive, misleading and incomplete manner. Gemini Earn, a scheme that allowed customers to earn income in exchange for depositing their cryptocurrency holdings, has become the subject of a public dispute between the two businesses.
Gemini asserts that it was misled into believing that Genesis, DCG's insolvent digital asset company, was lending out the money of its Earn customers in a way that minimized risk and produced a return on their deposits. According to the lawsuit, Genesis carelessly lent enormous sums to a counterparty who DCG knew was using them to finance a risky arbitrage trading scheme. DCG has refuted the accusations, calling them “baseless, defamatory, and completely false."
In November 2022, Genesis stopped allowing withdrawals, which prompted customers and the founders of Gemini to threaten legal action. Over the next months, a public argument took place. Cameron and Tyler Winklevoss asked that Genesis present a repayment strategy for the $900 million loan they made to the now-bankrupt Genesis Global. In January, Silbert and DCG requested more time. Then, in February, it appeared that the companies had reached a repayment deal. However, by late May, things had already soured: Genesis had skipped a loan payment of $630 million.
Last week, Gemini released an open letter and made a final offer to restructure Genesis's debt in an effort to avert a lawsuit. In this letter, Gemini claimed that Silbert had committed fraud and that it would file a lawsuit if Barry Silbert did not respond.
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