{"id":32711,"date":"2023-07-07T13:22:47","date_gmt":"2023-07-07T17:22:47","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/winklevoss-gemini-sues-dcg-and-barry-silbert-for-fraud\/"},"modified":"2023-07-07T13:22:49","modified_gmt":"2023-07-07T17:22:49","slug":"winklevoss-gemini-sues-dcg-and-barry-silbert-for-fraud","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=32711","title":{"rendered":"Winklevoss\u2019 Gemini Sues DCG and Barry Silbert For Fraud"},"content":{"rendered":"
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Winklevoss twins led crypto exchange Gemini has filed a lawsuit<\/u> against the conglomerate Digital Currency Group (DCG) and its CEO Barry Silbert for allegedly defrauding creditors.\u00a0<\/p>\n

As per the lawsuit, Gemini claims the DCG CEO committed fraud as Genesis attempted to continue the Earn Program despite being \u201cmassively insolvent.\u201d<\/p>\n

US-based crypto exchange Gemini is the largest creditor of bankrupt crypto lending firm Genesis, the subsidiary of DCG.\u00a0<\/p>\n

The lawsuit comes just three days after Cameron Winklevoss put forward a final proposal for DCG to return over over $1 billion of its customers\u2019 funds.<\/p>\n

Gemini Claims Barry Silbert Knew Genesis Was Insolvent\u00a0<\/h2>\n

As per the filing, Gemini notified Genesis of terminating its Earn program in October 2022, but Barry personally convinced Gemini to continue the program.<\/p>\n

The lawsuit claims the DCG CEO did this knowing Genesis was massively insolvent.<\/p>\n

Winklevoss owned exchange is now seeking to recover funds incurred as a result of Silbert\u2019s false, misleading, and incomplete representations to Gemini and DCG\u2019s role “in encouraging and facilitating Genesis\u2019s fraud against Gemini.\u201d<\/p>\n

The lawsuit further alleges that when Three Arrows Capital (3AC) collapsed in June 2022, it blew a $1.2 billion hole in Genesis\u2019s balance sheet. But Silbert did not come clean and lied that DCG had stepped in to absorb the losses.<\/p>\n

\u201cBarry, DCG, and Genesis all conspired to create false financial reports to hide the truth from Gemini and creditors,\u201d Cameron Winklevoss tweeted sharing the lawsuit in a Twitter thread<\/a>.\u00a0<\/p>\n

Instead of covering losses of its subsidiary like it informed Gemini, DCG wrote Genesis a 10 year promissory note with 1% interest rate \u2013 worth just a fraction of its $1.1 billion face amount, Gemini co-founder revealed in the lawsuit.\u00a0<\/p>\n

The lawsuit does not come as a surprise as the US-based exchange had continuously warned DCG of taking legal action if it did not move to resolve the issue.\u00a0
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US SEC Is Suing Gemini For Its Earn Program<\/h2>\n

The U.S. Securities and Exchange Commission (SEC) filed a lawsuit in January against Gemini and Genesis for allegedly offering unregistered securities through the exchanges Earn program.<\/p>\n

New York State\u2019s Department of Financial Services was also investigating Gemini over its claims about the assets in its Earn lending program.<\/p>\n

Apparently, many Gemini users believed that assets in their Earn accounts were protected by the Federal Deposit Insurance Corporation.<\/p>\n

As reported<\/u> earlier in May, Gemini and Genesis requested the court to dismiss the lawsuit brought on by the US SEC.\u00a0<\/p>\n<\/p><\/div>\n