Bankrupt crypto lender Genesis sues Gemini to recover $689M of ‘preferential transfers’

Bitcoin News

Bankrupt crypto lender Genesis Global Capital has filed a lawsuit against cryptocurrency exchange Gemini to recover $689 million in preferential transfers, according to a Nov. 21 court filing.

The lawsuit alleges that during the 90-day period before Genesis filed for bankruptcy in January, Gemini withdrew an “aggregate gross amount of no less than approximately $689,302,000” at the expense of other creditors and continues to benefit through retaining the property Genesis seeks to recover. Genesis’s council requested the court to use the remedies provided by the United States Bankruptcy Code to correct the “unfairness and return Defendants to the same position as Plaintiff’s other similarly-situated creditors.”

The two crypto giants have been embroiled in a public feud after the collapse of the FTX crypto exchange over the recovery of funds that escalated into lawsuits.

Earlier, Gemini filed an adversary proceeding against bankrupt Genesis on Oct. 27 to use 62,086,586 shares of Grayscale Bitcoin Trust (GBTC). These shares were used as collateral to secure loans made by 232,000 Gemini users to Genesis through the Gemini Earn Program. The collateral value grew to $1.6 billion as per current market conditions.

RelatedCourt approves Genesis settlement of $175M to FTX, expunges billions in claims

Genesis filed for bankruptcy in January earlier this year after suspending withdrawals in November 2022. The Genesis bankruptcy had an adverse effect on the Gemini Earn program, leading to the crypto exchange suing Genesis parent company DCG and its CEO Barry Silbert for fraud in connection with the Earn program in July. 

Later In September, Genesis also sued its parent company, DCG, seeking the repayment of multiple loans worth over $600 million.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

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