Gemini users file class-action request against Genesis and DCG

Quick Take

  • Three Gemini Earn users have filed a request for class-action arbitration against Genesis Global Capital and Digital Currency Group.
  • They allege, among other things, that Genesis worked with its parent company to hide its insolvency.

Three users of Crypto exchange Gemini's Earn program have reportedly filed a request for class-action arbitration against Genesis Global Capital and Digital Currency Group.

The request, which is not to be confused with a class-action lawsuit, comes weeks after the Winklevoss-founded exchange suspended Earn redemptions — a direct consequence of Genesis freezing withdrawals.

The three claimants allege that the terms of Gemini Earn's master agreement were broken when Genesis purportedly failed to disclose — and later concealed — its insolvency in the summer. 

They also allege that Genesis worked with its parent company, Digital Currency Group, to hide its insolvency by exchanging $2.3 billion in debt owed by collapsed crypto hedge fund Three Arrows Capital for a $1.1 billion promissory note due in a decade.

Furthermore, the claimants believe Genesis' master agreement creates the unregistered sale of securities.

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Winklevoss and Silbert publicly spatting

Meanwhile, the Winklevoss brothers and their Gemini Trust Co. face a potential class-action complaint on accusations of fraud and violations of the Exchange Act. "Gemini marketed GIAs with repeated false and misleading statements, including that GIAs were a secure method of collecting interest," the complaint states about Gemini Earn.

Bringing the issue further into the public sphere is yesterday's open-letter accusation from Cameron Winklevoss that Digital Currency Group head Barry Silbert engaged in "bad faith stall tactics" and comingled funds.

Updated to add a link to Silver Golub & Teitell LLP's announcement.


© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Adam is the managing editor for Europe, the Middle East and Africa. He is based in central Europe and was a managing editor and podcast host at the crypto exchange OKX's former research arm, OKX Insights. Before that, he co-founded BeInCrypto.com, which he elevated into one of the leading crypto media brands at its peak as the editor-in-chief. Earlier, he served as the editor-in-chief at Bitcoinist.com. Before joining the blockchain and crypto industry, he worked for Looper.com, Grunge.com and SVG.com. He tweets via @XBT002 and can be emailed at [email protected].

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