With every passing day, Genesis’ wounds are getting deeper. In November, Genesis Global Capital [GGC], the lending business of Genesis Trading, suspended redemptions. Right after, the company sought a $1 billion emergency loan. It also warned that it would go bankrupt without funding support.
By the end of the month, the firm was in discussions with restructuring lawyers in order to steer away from insolvency. Then, in December it was reported that the lender’s parent company, the Digital Currency Group [DCG] was attempting to raise capital to save Genesis’ sinking ship. The same was allegedly being done “in part” to stave off the immediate repayment of a loan to Todd Boehly’s investment house.
Trouble Mounts Up Further For Genesis
Now, there’s more to add to the crypto lender’s woes. Three Gemini Earn users have filed a request for class action arbitration against GGC and DCG. This was done in response to Gemini suspending its Earn redemption program because of Genesis freezing its withdrawals.
The claimants contend that Genesis failed to return their digital assets as mandated by the Master Agreements between them. Additionally, they’ve also blamed Genesis for first breaching the Master Agreement when the firm became insolvent in the summer of 2022 but veiled its insolvency from its customers.
The filing further added,
“GGC concealed the insolvency in part, the demand alleges, by orchestrating a sham transaction with its parent company, DCG, whereby DCG “bought” the right to collect a $2.3 billion debt owed to GGC by insolvent hedge fund Three Arrows Capital for a promissory note of $1.1 billion due in 2033.“
There is another parallel class action suit against the crypto lender and its founders, the Winklevoss twins. They are being sued by investors contending that the exchange sold interest-bearing accounts that it did not register as securities. Specifically, investors pointed fingers at the company and its founders for fraud and violations of the Exchange Act. The proposed class-action complaint was filed in Manhattan’s federal court.
Furthermore, Gemini’s Cameron Winklevoss and DCG’s CEO Barry Silbert got into a Twitter feud a day back. The former accused the latter of engaging in “bad faith stall tactics.”