Digital Currency Group Files to Dismiss Crypto Exchange Gemini’s Fraud Claims

Digital Currency Group, oregon DCG, filed a motion to dismiss a suit brought past period by cryptocurrency speech Gemini, which alleged the crypto conglomerate and its founder, Barry Silbert, committed fraud done DCG’s Genesis subsidiary that held funds for Gemini’s Earn program.

Gemini’s July 7 lawsuit claims DCG and Silbert misrepresented the fiscal wellness of lending subsidiary Genesis and induced Gemini Earn customers to proceed successful the lending program, adjacent though DCG and Silbert were alert Genesis had a billion-dollar spread successful its equilibrium expanse linked to past year’s illness of Three Arrows Capital, a crypto hedge money that's besides known arsenic 3AC.

The Gemini Earn programme was launched successful February 2021. It allowed the exchange’s retail customers to gain yields of up to 7.4% by lending their crypto assets to Genesis. The implosion of 3AC successful June 2022 harmed Genesis, whose presumption became adjacent worse aft crypto speech FTX’s illness successful November 2022. Gemini had to halt withdrawals from the Earn programme that month, and Genesis filed for bankruptcy connected Jan. 19, 2023.

Cameron and Tyler Winklevoss

DCG called Gemini’s July ailment a continuation of a “public relations campaign” carried retired by the exchange’s owners, Cameron and Tyler Winklevoss, and “an effort to deflect blasted by contriving a public, Twitter-based quality assassination run against Defendant DCG (Genesis’ indirect parent) and Silbert (DCG’s founder) — neither of whom operated, oversaw oregon had immoderate substantive engagement with the Gemini Earn program.”

DCG besides said Genesis “is not a suspect here,” claiming that “Gemini actively encouraged its existing customers to lend their integer assets (including cryptocurrencies) to Genesis successful speech for interest, representing to its customers that it was a blase marketplace subordinate and that it had thoroughly vetted Genesis.”

A captious constituent of Gemini’s ailment concerns claims that DCG and Silbert assured the Winklevoss twins, during a gathering successful the summertime of past twelvemonth that DCG had absorbed a $1.1 cardinal spread near successful the Genesis equilibrium expanse caused by the 3AC collapse. The Winklevoss twins assertion the loan, a 10-year promissory enactment astatine 1% interest, was misrepresented to them arsenic a short-term receivable that could beryllium cashed retired successful a year.

DCG, successful its dismissal, said Gemini “does not explain” wherefore the practice made by Silbert astatine a luncheon gathering with a Gemini co-founder was fraudulent.

Although Gemini initially filed its suit successful New York’s State Supreme Court, DCG successfully shifted it to the U.S. District Court for the Southern District of New York, tribunal records show.

“At its core, the suit is simply a continuation of the Winklevoss’ yearlong Twitter-based quality assassination and nationalist relations run against DCG and Barry Silbert to deflect blasted from their ain mismanagement,” a typical for DCG said via email.