Gemini users file class-action request against Genesis and DCG

Three users of Crypto exchange Gemini's Earn program have reportedly filed a request for class-action arbitration against Genesis Global Capital and Digital Currency Group.

The request, which is not to be confused with a class-action lawsuit, comes weeks after the Winklevoss-founded exchange suspended Earn redemptions — a direct consequence of Genesis freezing withdrawals.

The three claimants allege that the terms of Gemini Earn's master agreement were broken when Genesis purportedly failed to disclose — and later concealed — its insolvency in the summer. 

They also allege that Genesis worked with its parent company, Digital Currency Group, to hide its insolvency by exchanging $2.3 billion in debt owed by collapsed crypto hedge fund Three Arrows Capital for a $1.1 billion promissory note due in a decade.

Furthermore, the claimants believe Genesis' master agreement creates the unregistered sale of securities.

Winklevoss and Silbert publicly spatting

Meanwhile, the Winklevoss brothers and their Gemini Trust Co. face a potential class-action complaint on accusations of fraud and violations of the Exchange Act. "Gemini marketed GIAs with repeated false and misleading statements, including that GIAs were a secure method of collecting interest," the complaint states about Gemini Earn.

Bringing the issue further into the public sphere is yesterday's open-letter accusation from Cameron Winklevoss that Digital Currency Group head Barry Silbert engaged in "bad faith stall tactics" and comingled funds.

Updated to add a link to Silver Golub & Teitell LLP's announcement.