Gemini files complaint against Genesis over $1.6 billion in GBTC shares

Crypto exchange Gemini Trust Co. filed a complaint against now bankrupt crypto lender Genesis Global Holdco LLC over which firm should have nearly $1.6 billion worth of shares of the Grayscale Bitcoin Trust.

Lawyers for Gemini asked a New York bankruptcy court on Friday to decide that it should have access to the over 62 million GBTC shares. Gemini told the court that Genesis promised to deliver those shares to secure loans made by Gemini users as part of its Gemini Earn Program.

“Today, the Collateral is worth nearly $1.6 billion, an amount that would completely secure and satisfy the claims of every single Earn User,” Gemini said in its complaint.

Gemini has been battling Genesis and its parent company Digital Currency Group for months over an agreement the firms had as part of the Gemini Earn Program. That program allowed users to lend digital assets to Genesis Global as part of a tri-party contract and was terminated early this year.

“Amidst the broad market turmoil in the summer of 2022, Gemini worked tirelessly to evaluate Genesis’s financial condition in order to manage risk related to the Gemini Earn Program,” Gemini said in its complaint.

Gemini also accused Genesis of taking repeated actions to harm Earn Users and to delay recovery of users’ digital assets, according to the complaint.

An ongoing saga

Genesis’ lending unit filed for bankruptcy protection at the beginning of the year. Since then, Gemini co-founders Tyler and Cameron Winklevoss have accused Genesis and DCG CEO Barry Silbert of misleading investors.

Both firms have also caught regulators’ ire. The Securities and Exchange Commission sued Gemini and Genesis with an unregistered securities offering over the Gemini Earn program in January. Last week, New York Attorney General Letitia James filed a complaint against all three: Genesis, Gemini and DCG.

DCG did not immediately respond to a request for comment.

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