Gemini Trust Company has filed a lawsuit against Digital Currency Group (DCG) and its CEO Barry Silbert, citing allegations of fraud related to a billion-dollar discrepancy in DCG’s subsidiary Genesis’s balance sheet.
Mounting accusations and rebuttal
The New York-based Gemini entered into a partnership with Genesis that facilitated customers to earn up to 7.4% in annual yield. However, allegations state that Silbert knowingly induced the continuation of the program despite being aware of Genesis’s insolvency. Genesis’s bankruptcy announcement in January 2023 adds further credence to these claims.
The lawsuit contends that Genesis, operating in collaboration with DCG, misled Gemini into lending by boasting supposedly thorough counterparty vetting procedures and robust risk-management practices. The lawsuit further alleges that these claims were entirely false, concealing Genesis’s reckless lending practices that escalated the risks. The result, according to Gemini, was a significant loss for the firm’s customers who had participated in the Earn program.
Gemini co-founder Cameron Winklevoss has publically criticized Silbert, labeling him as the principal orchestrator of the alleged fraud. The lawsuit is seeking a range of reparations, including damages, attorney fees, and any other relief deemed just and proper.
DCG retorts: ‘Defamatory claims’ and ‘publicity stunts’
DCG, however, dismisses these allegations as baseless and defamatory, retorting that the lawsuit is a publicity stunt. With an estimated $50 billion in assets under management, the crypto conglomerate asserts that Gemini’s leadership was largely absent during the crisis resolution attempts. They allege that the Winklevoss twins, founders of Gemini, were missing in action while DCG’s leadership was actively working to negotiate a deal.
This lawsuit marks another episode in an ongoing public feud between Gemini and Genesis over the controversial Gemini Earn product, which also faces a lawsuit from the U.S. Securities and Exchange Commission.