Digital Currency Group (DCG) and CEO Barry Silbert filed a motion on Thursday to dismiss a lawsuit brought by Gemini Trust Company last month.
Gemini accused DCG and Silbert of making "false, misleading, and incomplete representations” to Gemini after Genesis—which is owned by DCG—filed for Chapter 11 bankruptcy in January.
Gemini’s complaint included an allegation that Silbert knew Genesis was “massively insolvent” after it sustained hefty losses from the collapse of crypto hedge fund Three Arrows Capital last year.
Gemini Lawsuit Accuses Barry Silbert and Digital Currency Group of Fraud
After threatening to do so for months, Gemini Trust Company accused Digital Currency Group (DCG) and its CEO Barry Silbert of fraud in a lawsuit filed Friday. In the complaint, the New York-based crypto exchange accuses DCG—parent company of bankrupt digital asset firm Genesis—and its founder of making "false, misleading, and incomplete representations and omissions to Gemini." Gemini and Genesis have been locked in a public battle over Gemini Earn, a program that allowed users to receive betwee...
But Silbert hid that information from one of Gemini’s co-founders during a lunch meeting and urged Gemini to continue with the Gemini Earn program instead, the complaint alleged.
On Thursday, DCG and Silbert’s counsel said Gemini failed to explain why the presentation made by Silbert was supposedly fraudulent. As for other allegations, the defendants’ counsel claimed it concerned Genesis and not DCG or Silbert.
“The rest of the complaint is a hodgepodge of conclusory allegations against non-defendant Genesis,” a letter supporting the motion said, adding the claims should’ve been filed in Genesis’ bankruptcy case. “These allegations against Genesis have no legal bearing on the claims against the actual Defendants in this case.”
Genesis was the primary partner of Gemini Earn, a service offered by Gemini that let customers earn interest on crypto loaned out to the firm. Genesis suspended customer withdrawals amid the collapse of FTX last November.
Genesis Suspending Client Withdrawals for Lending Arm Citing 'FTX Impact'
On Wednesday morning, Genesis announced to clients that it would pause withdrawals from its lending arm, citing "unprecedented market turmoil" due to the now-bankrupt crypto exchange FTX. "In consultation with our professional financial advisors and counsel, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business," the firm wrote. Genesis reported $12.5 billion active loans outstanding and processed over $130.6 billion loans in 20...
Gemini was co-founded by Tyler and Cameron Winklevoss, who have shared frustrations with Silbert publicly on Twitter. In July, before the lawsuit was filed, Cameron Winklevoss issued a “final offer” over Genesis’ debt-restructuring negotiations.
In the letter supporting the defendants’ motion to dismiss, DCG and Silbert’s counsel said the Winklevoss twins have engaged in a “Twitter-based character assassination campaign” to deflect the blame of “irate [Gemini Earn] customers.”
The letter claimed that DCG and Silbert had “virtually nothing to do with the Gemini Earn program” and are not liable under an agreement each Gemini Earn customer entered into with Gemini and Genesis.
