Mass Crypto Drama Unfolds: Gemini Fights Genesis Over $1.6 Billion Worth of BTC

Gemini Takes Legal Action Against Genesis for Unlawfully Using GBTC Shares as Collateral for Earn Program, Valued at $1.6B

Gemini sues Genesis for using GBTC shares as Earn collateral, valued at $1.6B.

Do you like juicy dramas? Well, here’s one for you—Gemini, the cryptocurrency exchange, has filed a lawsuit against Genesis Global Holdco, the bankrupt crypto lender. And guess what? The fate of a staggering 62,086,586 shares of the Grayscale Bitcoin Trust hangs in the balance. That’s like a stadium full of Bitcoin fans screaming for justice!

So here’s the deal: Gemini users, all 232,000 of them, used those precious GBTC shares as collateral to secure loans from Genesis through the Gemini Earn Program—a wild, wild world! And hold on tight, because that collateral is currently worth close to $1.6 billion. Who knew virtual assets could be this dramatic and valuable?

According to the suit—I know, legal stuff, but stay with me—Gemini has already received a hefty sum of $284.3 million from foreclosing on the collateral. They wanted to distribute this to the Earn users, but Genesis had other plans, putting a big fat dispute sign in the way. The drama unfolds!

Genesis, oh Genesis, they want to use the initial value of the collateral—more than $800 million—to determine the Earn Users’ claims, rather than the foreclosure value. Why? Apparently, because the foreclosure value was even greater than the initial value. Talk about wild twists and turns! But hold up, if Genesis wins this battle, they could potentially free up hundreds of millions of dollars for distribution to other creditors. It’s like a game of crypto chess, and the stakes are sky-high!

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But wait, there’s more! Gemini claims that Genesis’ parent company, Digital Currency Group (DCG), cheekily transferred more collateral to Genesis with the sole purpose of handing it over to Gemini for the Earn Users’ benefit. Clever, right? Well, not so fast. Genesis wants to use this collateral for other purposes. Ah, the audacity!

Gemini, not one to hold back, argues that if the court grants them victory, it’ll facilitate the return of more than $1 billion in digital assets that Genesis has wrongfully withheld from the Earn Users for nearly a year. It’s like one of those epic moments in a courtroom movie—a nail-biting battle for justice!

But who exactly are these Earn Users? Well, they’re 99% of Genesis creditors, with their claims representing a whopping 28% of all claims by value. Talk about power in numbers! They’re like a relentless army storming the gates of crypto injustice, demanding their fair share.

Now, let’s take a step back and remember that Genesis filed for bankruptcy back in January, causing quite the chaos. Withdrawals were suspended, and Gemini wasn’t having any of it. They sued DCG and its CEO Barry Silbert for fraud in connection with the Earn program. It’s like a crypto version of “Law and Order”—everybody’s got a bone to pick!

But that’s not all—Gemini and Genesis are also tangled in a web spun by the United States Securities and Exchange Commission. The SEC claims that Gemini Earn offered unregistered securities, and both exchanges are defendants in this thrilling case. Oh, and the New York Attorney General, Letitia James, chimed in too. She sued Gemini, Genesis, and DCG, accusing them of defrauding thousands of users, including 29,000 New Yorkers. Drama, drama, drama everywhere!

As the battle rages on, we’ll be eagerly waiting for the court’s decision. Will justice prevail, or will the drama continue? Stay tuned, dear readers, because the world of crypto never fails to entertain.

Hey, fellow crypto enthusiasts! What do you think about this epic courtroom battle? Are you Team Gemini or Team Genesis? Let me know in the comments below!

Read more thrilling crypto stories: Deposit risk: What do crypto exchanges really do with your money?

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