Gemini sues Digital Currency Group, Barry Silbert over alleged fraud

Quick Take

  • Crypto exchange Gemini sued Digital Currency Group and its founder on Friday, accusing Barry Silbert of being “the architect and mastermind of the DCG and Genesis fraud against creditors.”

Crypto exchange Gemini is suing Digital Currency Group and its founder Barry Silbert, with Gemini co-founder Cameron Winklevoss accusing Silbert of being "the architect and mastermind of the DCG and Genesis fraud against creditors."

The move came after Winklevoss gave Silbert an ultimatum last week to immediately pay $640 million he says is owed to Gemini's Earn clients or face a lawsuit.

"This lawsuit seeks to recover from Defendants the damages and losses that Gemini has incurred as a direct result of DCG’s and Silbert’s false, misleading, and incomplete representations and omissions to Gemini, and Defendants’ role in encouraging and facilitating Genesis’s fraud against Gemini," according to the complaint. 

Winklevoss has argued that Gemini Earn users are stuck in limbo with over $1.2 billion of assets stuck in Genesis Global, which DCG owns.

Gemini Earn allowed people to lend digital assets to Genesis Global as part of a tri-party contract.

DCG responds

DCG said in a statement on Twitter that the lawsuit was "yet another publicity stunt from Cameron Winklevoss." It said that any suggestion of wrongdoing by DCG or its employees is "baseless, defamatory, and completely false."

The company said that it's continuing to work with creditors and that a mediation process underway is "nearing a close."

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"We expect to bring the Genesis Chapter 11 case to a conclusion soon," DCG said in the statement. 

Genesis bankruptcy

Genesis Global filed for bankruptcy protection earlier this year after taking a financial hit following the collapses of the crypto hedge fund Three Arrows Capital and the FTX exchange last year.

Winklevoss has accused Silbert before of stalling efforts to reclaim funds for Gemini Earn users. The program has been frozen since November.

The U.S. Securities and Exchange Commission sued both Gemini and Genesis earlier this year and said that the Earn program constituted an unregistered offer and sale of securities under U.S. law.

(Updates with comment from DCG and additional background.)

 


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About Author

Sarah is a reporter at The Block covering policy, regulation and legal happenings. Before, Sarah was a reporter with CQ Legal writing about securities regulation, which is where she first started reporting on crypto. Sarah has also written for The Bond Buyer and American Banker, among other finance-related publications. She graduated from the University of Missouri and earned a degree in print and digital journalism. Sarah is based in Washington D.C., and is an avid coffee lover. You can follow her on Twitter @ForTheWynn.

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