Gemini vs Genesis – All Prepared for legal Battle

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gemini vs Genesis

The post Gemini vs Genesis – All Prepared for legal Battle appeared first on Coinpedia Fintech News

Gemini Clients have filed a Class Arbitration case against Genesis-DCG company as the company had halted withdrawals of the Gemini Earn Program when the FTX crash happened in November 2022. The reason given by Genesis was ‘unprecedented market turmoil’. Gemini assured users that it is working on the problem and will resolve it soon.

What is Class Action Arbitration?

A Class Action Arbitration is a dispute resolution between two parties made under a neutral third party that is faster and cheaper than a Class Action Lawsuit. The arbitration process is voluntary and formal and the decision of the arbitrator becomes binding and hence cannot be appealed.

What happened between Genesis & Gemini?

Genesis was the lending partner for the Gemini earn program where 7.4% interest rates were offered to users for their crypto deposits. When Genesis halted withdrawals due to financial distress, Gemini had no other option but to suspend the Gemini Earn Program which then become a bad mark on the overall reputation of Gemini. This move has affected more than 3,40,000 investors in Gemini with an aggregate amount of $900 million.

The Master Agreement between Genesis & Gemini was breached when Genesis became insolvent in 2022 but concealed this fact from them. Genesis also engaged in a fake transaction with the parent company DCG, where it exchanged the right to collect $2.3 billion debt owed to Genesis by hedge fund “Three Arrows Capital” for a promissory note of $1.1 billion due in 2033.

Genesis further broke the master agreement when it failed to return the digital assets of Gemini Earn Users. Moreover, the master agreement was also used in creating the unregistered sale of securities.

There is also a Class of Action lawsuit filed against Gemini by Gemini users for involving in the sale of unregistered securities via its Earn Program. Winklevoss, Co-founder of Gemini, accused DCG CEO Barry Silbert of engaging in ‘bad faith stall tactics’ with Gemini and said that DCG owes $900 million to Gemini & its clients.

He accused Silbert of misusing investor funds for personal gains and running behind lawyers to save his face instead of focusing on the problem and resolving it. Finally, he gave Silbert a deadline until Jan 8, 2023, to publicly commit to solving this problem, or else a legal battle is likely to follow.

There is a high chance that Gemini may force Genesis to file for Bankruptcy in case the problem is not resolved. If this happens, it will result in the liquidation of DCG assets (based on callable loans). Gemini is committed to helping its investors and is also keen on rebuilding its online reputation.