Genesis Global, a well-known lending company, has recently initiated a legal action against Gemini Trust with the goal of recovering approximately 700 million dollars.
According to the revelations outlined in the complaint, Gemini Trust allegedly withdrew a total value exceeding 689 million dollars in the three months leading up to Genesis‘ bankruptcy declaration. The withdrawals were made by users of the Gemini Earn program, a lending service provided by Gemini in collaboration with Genesis.
Genesis contends that the cryptocurrency exchange benefited from the money transfers at the expense of other creditors of the company and continues to do so. According to the complaint filed by the lending company, Gemini retained ownership of those funds that Genesis seeks to recover through this legal action.
Ponzi Scheme accusations
The case has been brought to the bankruptcy court in New York and follows legal proceedings initiated by the Attorney General of New York, Letitia James.
James accuses Gemini and Genesis of orchestrating a Ponzi scheme through the Gemini Earn product. The service allegedly led to investment losses exceeding 1 billion dollars in November 2022, following the suspension of withdrawals from the exchange.
Gemini’s counterattack
Shortly after the Attorney General filed the case, Gemini countersued Genesis. According to Gemini’s claims, the lending company owes Gemini approximately 1.6 billion dollars in shares of the Grayscale Bitcoin Trust (GBTC).
