Genesis Global Capital Pursues $689M from Gemini in Legal Battle

A court filing dated November 21 indicates that insolvent cryptocurrency lender Genesis Global Capital has initiated legal proceedings against cryptocurrency exchange Gemini to recoup $689 million in preferential transfers.

According to the lawsuit, Gemini withdrew an “aggregate gross amount of no less than approximately $689,302,000” from Genesis before the company’s January bankruptcy filing.

This withdrawal occurred at the expense of other creditors, and Gemini continues to benefit by retaining the property Genesis is attempting to retrieve.

The counsel for Genesis petitioned the court to apply the remedies stipulated in the United States Bankruptcy Code to rectify the “inequity and restore the defendants to an equivalent standing as the plaintiff’s other creditors in comparable circumstances.”

Following the November 2022 collapse of the cryptocurrency exchange FTX, the two crypto titans became entangled in a public dispute regarding retrieving funds, which precipitated legal proceedings.

The CEOs of the two companies engaged in public spats, accusing one another of noncooperation and threatening legal action, in addition to pursuing legal remedies.

On October 27th, Gemini initiated an adversary proceeding against Genesis to seize 62,086,586 shares of Griffin Bitcoin Trust.

The shares were pledged as security for advances extended to Genesis by 232,000 Gemini users via the Gemini Earn program. At present, the collateral is valued at approximately $1.6 billion.

January saw the filing of bankruptcy papers by Genesis, which halted withdrawals in November 2022.

As a result of the negative impact the Genesis bankruptcy had on the Gemini Earn program, the cryptocurrency exchange filed a fraud suit against Genesis’ parent company, Digital Currency Group (DCG), and its CEO, Barry Silbert, in July.

Genesis filed suit against DCG in September, also pursuing the repayment of multiple loans totaling more than $600 million.