Gemini Alleges DCG’s Deceptive Bankruptcy Plan Assertions

Gemini, a digital asset exchange, has accused venture capital firm Digital Currency Group (DCG) of using deceptive tactics to avoid meeting its full obligations to creditors of its crypto lending subsidiary, Genesis.

This legal dispute began in July when Gemini filed a lawsuit against DCG after Genesis declared bankruptcy, leaving $735 million in assets owed to users of Gemini Earn. Gemini Earn was a program that allowed exchange customers to lend their cryptocurrencies and earn interest.

On September 13th, DCG proposed an agreement that aimed to provide unsecured creditors, including Gemini Earn users, with a significant portion of their funds. DCG claimed that the proposed transactions could offer unsecured creditors a recovery rate of 70-90%, with a substantial portion of this recovery in digital currencies. Notably, Gemini Earn users were estimated to potentially recover about 95%-110% of their claims.

However, in a recent court filing, Gemini disputed DCG’s proposed recovery rates as potentially misleading or deceptive. Gemini asserted that the actual value that Gemini Lenders would receive under the current “agreement in principle” would fall far short of the proposed recovery rates.

Gemini contended that DCG’s proposal might shortchange Gemini lenders, allowing DCG to pay less than what it legitimately owes. Gemini accused DCG of making contrived, misleading, and inaccurate claims to evade responsibility for the harm caused to creditors, especially the Gemini Lenders. They argued that receiving a fractional share of interest and principal payments over seven years from a risky counterparty like Genesis is not at all equivalent to receiving the actual cash and digital assets owed to Gemini Lenders today.

Read Also: Coinbase New Ethereum Layer-2 Achieves Record Daily Transaction Volume, Outperforming Arbitrum and Optimism

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

Comments are closed.