• Gemini Exchange is suing the parent company of bankrupt crypto broker Genesis over the Gemini Earn program.
• The US-based exchange claims that top executives of the lender misled creditors in a fraud scheme.
• According to Gemini co-founder Cameron Winklevoss, Digital Currency Group (DCG) and its chief executive Barry Silbert created false financial reports to hide information from their creditors.
Gemini Sues DCG Over Crypto Earn Dispute
US-Based Crypto Exchange Gemini has filed a lawsuit against Digital Currency Group (DCG) and its chief executive, Barry Silbert, claiming that they misled creditors in a fraud scheme related to the Gemini Earn program.
Background on the Earn Program
The Earn Program was a collaboration between Gemini and Genesis which allowed retail investors to loan out their digital assets to earn interest. When Genesis went bankrupt, it owed $735 million to members of the program.
Allegations Against DCG & Silbert
According to Cameron Winklevoss, after Gemini decided to end the Earn program, Silbert contacted them urging them to continue it knowing that Genesis was “massively insolvent”. Additionally, Winklevoss alleges that DCG, Silbert and other executives created false financial reports in order to trick their creditors and maintain the illusion that everything was in order.
Collapse of Three Arrows Capital
Three Arrows Capital (3AC) collapsed in June 2022 which blew a $1.2 billion hole in Genesis’s balance sheet. Instead of coming clean about this issue, Genesis claimed that everything was business as usual because DCG had stepped in to absorb the losses.