Genesis Global Capital, a cryptocurrency lender, has filed a lawsuit against its former business partner, Gemini Trust, seeking the recovery of over $689 million.
The court filing, made late on Tuesday, alleges that Gemini engaged in ‘preferential transfers’ totaling approximately $689,302,000 from Genesis.
The lawsuit contends that these preferential transfers were made at the detriment of other creditors and urges the court to address and rectify this perceived unfairness.
The conflict between Genesis and Gemini has been characterized by public disputes and legal battles triggered by the collapse of FTX. Genesis filed for bankruptcy in January, followed by a lawsuit from Gemini against its parent company, Digital Currency Group (DCG), in July. DCG dismissed the lawsuit as “defamatory” and a “publicity stunt.”
In September, Genesis took legal action against its parent company, DCG, aiming to recover multiple loans totaling over $600 million. The tensions escalated in October when Gemini counter-sued Genesis over 60 million shares of the Grayscale Bitcoin Trust (GBTC), valued at approximately $1.6 billion.
The ongoing saga has not only involved legal disputes between Genesis and Gemini but has also drawn attention from U.S. authorities. In January, just days before Genesis filed for bankruptcy, the U.S. Securities and Exchange Commission (SEC) leveled allegations against Genesis and Gemini, accusing them of selling unregistered securities.
The troubles for Gemini and Genesis began in 2022 after the crypto hedge fund Three Arrows Capital and FTX collapsed, led by Sam Bankman-Fried. This series of events eventually led to Genesis filing for bankruptcy in January.
Adding to the legal complexities, New York Attorney General Letitia James filed a lawsuit against Digital Currency Group (DCG), Genesis, and Gemini last month. The lawsuit alleges these entities defrauded over 230,000 investors, including at least 29,000 New Yorkers, of over $1 billion.
The court filing suggested that during the market turmoil triggered by the collapse of Terraform Labs and Three Arrows Capital, Gemini initiated “unprecedented withdrawals” before Genesis declared bankruptcy. These actions allegedly contributed to a “run on the bank.”
During the 90-day preference period, Gemini sought the repayment of previous loans to Genesis. Based on information and belief, the filing characterized these transfers as “avoidable” and suggests that Gemini was aware of Genesis’ insolvency during this period.