- Genesis has sued Gemini Trust for making preferential transfers of about $689 million
- According to Genesis, Gemini made the transfers at the expense of other creditors
- There has been a protracted legal feud between Genesis and Gemini since the collapse of FTX
Genesis Global Capital, a leading crypto lender, has sued cryptocurrency exchange Gemini Trust, its former partner, over an allegation of making preferential transfers of an “aggregate gross amount of no less than approximately $689,302,000.”
In a filing Genesis submitted last Tuesday, the crypto lender accused Gemini of making the transfers at the expense of other creditors, asking the court to “correct this unfairness.”
There has been a protracted legal feud between Genesis and Gemini since the collapse of FTX. Following the unfortunate event, Genesis filed for bankruptcy last January. Gemini sued Digital Currency Group (DCG), Genesis’ parent company, in July over claims of defamation.
Two months later, Genesis sued DCG, seeking the parent company to repay multiple loans worth over $600 million, and the following month, Gemini sued Genesis for over 60 million Grayscale Bitcoin Trust (GBTC) shares, worth about $1.6 billion.
The legal entanglements between Genesis and Gemini since the demise of FTX have also extended to third parties. Shortly before Genesis’ bankruptcy filing, the US Security and Exchange Commission (SEC) accused both partners of selling unregistered securities. Their legal troubles continued when Letitia James, New York Attorney General, sued DCG, Genesis, and Gemini for allegedly defrauding over 230,000 investors.
The attorney’s filing accused Gemini of making “unprecedented withdrawals” that contributed to a “run on the bank”. According to the filing, Gemini made the withdrawals in the middle of the market turmoil caused by the collapse of Terraform Labs and digital asset hedge fund Three Arrows Capital before filing for bankruptcy.
The filing also alleged that the crypto exchange demanded repayment of prior loans made to Genesis during the 90 days, known as the preference period, claiming that the transfers were avoidable and suggesting that Genesis was insolvent.
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