Cryptocurrency exchange Gemini takes legal action against former affiliate Genesis, alleging obstruction and harm to clients
The cryptocurrency exchange Gemini has taken legal action against Genesis, a former affiliate, in a bid to recover $1.6 billion worth of Grayscale Bitcoin Trust (GBTC) shares. The lawsuit has been filed to protect the interests of Gemini's Earn clients who were left without access to their assets after Genesis banned withdrawals.
Gemini's lawsuit alleges that Genesis has intentionally obstructed the process of recouping the funds needed to pay its clients' claims. Genesis, which is part of the Digital Currency Group, declared bankruptcy in January and ceased operations last month. This move left Gemini's Earn clients in a precarious position, as they were unable to access their assets.
The dispute centers around nearly $1.6 billion worth of shares of the Grayscale Bitcoin Trust (GBTC). According to Gemini, Genesis had promised to deliver these shares to secure loans made by Gemini users as part of its Gemini Earn Program. The cryptocurrency exchange alleges that Genesis has taken actions to harm users and delay the recovery of their digital assets.
This lawsuit is the latest development in an ongoing saga between the two companies, which have also faced regulatory scrutiny. The outcome of the lawsuit could have significant implications for the clients of Gemini's Earn program, and potentially for the wider cryptocurrency market.