In an unfolding saga involving well-known cryptocurrency industry players, Gemini, which is owned by the Winklevoss twins, reportedly withdrew roughly $280 million from Genesis Global just ahead of a withdrawal freeze and subsequent bankruptcy filing by the latter. Intriguingly, the two had previously collaborated on a ‘Earn’ program that permitted customers to accrue interest on their cryptocurrency reserves. Under it, cryptocurrency enthusiasts could lend their digital assets via Genesis.
In what could be seen as a prescient move, Gemini executed a notable withdrawal from Genesis in August of 2022, as per an anonymous source. The funds, it appears, were allocated towards creating a reserve, targeted at facilitating immediate redemptions for participants of the Gemini Earn initiative. Claims suggest none of this money found its way to the Gemini founders, according to close sources.
Adding to the dilemma, Genesis Global sought Chapter 11 bankruptcy protection in New York in January, shortly after which Gemini launched a legal claim in bankruptcy court for $1.1 billion, representing users of its Earn program. Subsequently, negotiations involving Gemini, Genesis, and parent company Digital Currency Group (DCG) ensnared both Genesis’s founder Barry Silbert and the Winklevoss twins. An agreement appearing to resolve the matter was reached earlier in February, although a stalemate persisted.
The legal entanglements have only intensified. Gemini moved to sue DCG for fraud in July, alleging that attempts to end the Earn program were made in mid-October 2022. Notably, promises were made by Silbert to address solvency worries. However, a DCG spokesperson dismissed these claims categorically, branding them a mere “publicity stunt”.
Further complicating matters, Genesis filed a lawsuit against its parent company, DCG, in September for unpaid loans totaling over $620 million. Adding to this layer of controversies, both Genesis and Gemini found themselves facing charges from the U.S. Securities and Exchange Commission in January, accused of the Earn program constituting an unregistered sale of securities.
Whilst it remains a mixed bag of allegations, legal entanglements and bankruptcy declarations, the unfolding scenario re-emphasizes the need for tighter regulations and prudence in cryptocurrency market practices.
Source: Cryptonews
