Gemini Sues Genesis Owner Over Failure to Recover Customers’ Bitcoin

Winklevoss-owned crypto exchange Gemini has filed a lawsuit against Digital Currency Group (DCG) – the owner of the institutional crypto lending company Genesis – for committing “fraud” against the exchange’s customers.

• The lawsuit asserts that DCG and its CEO, Barry Silbert induced depositors to lend “huge amounts of cryptocurrency and U.S. Dollars” to Genesis through “false, misleading, and incomplete representations” of the company’s financial position and “robust risk-management practices.”

• “Those were lies,” the filing states “As it turned out, Genesis was recklessly lending huge amounts to a counterparty that Defendants knew was using these huge amounts to fuel a risky arbitrage trading strategy.”

• Gemini is seeking relief including actual damages, punitive damages, and attorney’s fees.

• “DCG — and Barry personally – are direct participants in the fraud that has damaged Gemini and hundreds of thousands of Earn users,” said Gemini co-founder Cameron Winklevoss over Twitter on Friday. “This complaint is an important step in holding them accountable for what they have done.”

• Hundreds of thousands of Gemini customers have provided loans to Genesis through Gemini Earn, expecting to earn the difference on what Genesis charged its own lending counterparties.
• Gemini has since been forced to freeze customer withdrawals after Genesis’s bankruptcy, for which the exchange has itself been sued for fraud.