The legal team for Gemini, representing Gemini Trust, recently voiced their counterclaims toward Digital Currency Group (DCG). According to a filing in the United States Bankruptcy Court, the legal team accused DCG of manipulative tactics against Genesis creditors. Gemini’s lawyers claim DCG put forward a recovery plan full of “contrived, misleading, and inaccurate assertions”. The matter appears to centre around a recovery rate that was proposed by DCG, implying unsecured creditors could expect a “70–90% recovery on their investments, however, Gemini’s legal team maintains this would not translate to equivalent real-world values for the lenders.
DCG finds itself being criticised for potentially underpaying Gemini, with the firm accused of repackaging the situation to try to convince Gemini to accept a lower settlement. Essentially, the contention appears that DCG was using Genesis’s bankruptcy proceedings as justification for the terms of their recovery plan.
The feud between Gemini and DCG started with conflict over the former’s Gemini Earn program, which was financed in part by Genesis. Genesis paused withdrawals in November 2022 and eventually filed bankruptcy in January 2023 due to “unprecedented market turmoil”.
When Genesis declared bankruptcy, they owed upwards of $3.5 billion to their top fifty creditors, claims Gemini. In a bid to recuperate more than $1.1 billion in assets for their users, Gemini fired a lawsuit at DCG and its CEO, Barry Silbert, charging them with fraud.
In addition to Gemini’s lawsuit, Genesis also found itself in trouble with the U.S. Securities and Exchange Commission (SEC) because of their Earn program. The SEC filed a civil suit against Genesis and Gemini, arguing they sold unregistered securities via the Earn program. Both firms sought to dismiss the lawsuit, but it was still active at the time of publication.
Indeed, as the legal battles unravel, the crypto industry watches closely, particularly smaller investors or users who might have been affected by the actions of these entities. As the matter stands, it certainly paints a stark picture of the broader issue of regulations in the crypto-market and how they are managed between the companies themselves and overarching regulatory bodies.
This quagmire underscores the critical role of clear regulations incryptocurrencies safeguarding stakeholders and ensuring accountability. However, introducing stringent guidelines could risk stifling the innovation that decentralised technology brings. The industry holds its breath as the fine balance between regulation and innovation is negotiated. The lesson to be learned, however, is that accountability in the sector is not optional; it’s paramount.
Source: Cointelegraph
