In a recent report, Gemini has accused Genesis’ parent company, the Digital Currency Group (DCG), of presenting a misleading proposal for creditors. The ongoing dispute centers around the recovery rates promised by DCG, which Gemini’s legal team finds disingenuous.
Moreover, in a recent development, lawyers for Gemini Trust presented a sharp rebuttal against DCG’s plan. This proposal, tabled in the U.S. Bankruptcy Court for the Southern District of New York, suggested 70-90% recovery rates for unsecured creditors. Additionally, Gemini Earn users were promised a 95-110% recovery. However, this seemingly generous offer has stirred controversy.
DCG’s Proposal Under Fire
Hence, Gemini’s legal representatives claim DCG’s proposal contains “contrived, misleading, and inaccurate assertions,” painting it as an attempt to manipulate the situation. They assert that the proposed recovery rates are far from reality and not in real value terms. Consequently, Gemini feels that DCG’s primary aim is to pay less than its obligations.
Significantly, the feud between Gemini and DCG has its roots in the Gemini Earn program, a venture partly financed by Genesis. Following unprecedented market turmoil triggered by FTX’s collapse, Genesis halted withdrawals and declared bankruptcy in January 2023.
Besides, court documents reveal Genesis’ massive debt, owing over $3.5 billion to its top 50 creditors. This move led Gemini to launch a lawsuit against DCG, claiming recovery of $1.1 billion for its Earn users and accusing DCG of fraud.
In addition, Gemini co-founder Cameron Winklevoss didn’t mince words. He labeled Barry Silbert, DCG’s CEO, as the mastermind behind the alleged deceit. The case took another twist when the U.S. Securities and Exchange Commission filed a civil suit against Gemini and Genesis for potential unregistered securities sales through the Earn program.
The DCG’s recent proposal aims to renegotiate the terms of a $630 million loan between Genesis and DCG. With a part of this loan slated for cash repayment after the deal concludes and the remainder structured into a two-year note, the resolution is far from simple.
In addition, the next step in this legal tangle is a crucial vote by the creditors, determining the fate of DCG’s plan. Whatever the outcome, the crypto world watches closely, waiting for the dust to settle.
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