In a court filing on November 21, the bankrupt lender claimed that Gemini contributed to the bank’s collapse by making preferential transfers in the 90 days leading up to its bankruptcy filing. The lender argues that this gave Gemini an unfair advantage over other creditors and requests that the court rectify this inequity and treat Gemini the same as other similarly situated creditors.
Gemini has not yet responded to CryptoSlate’s request for comment at the time of publication.
This lawsuit is the latest development in a highly publicized dispute between the former business partners. Gemini and Genesis previously had a significant business relationship involving the now-defunct Gemini Earn investment program, which allowed exchange users to earn interest by lending money to Genesis, who then lent it to others. However, their relationship soured after Genesis abruptly halted withdrawals following the collapse of the FTX crypto exchange last year, leading to Genesis filing for bankruptcy in January.
Since then, Gemini has taken legal action against Digital Currency Group (DCG), the parent company of the lender, as well as CEO Barry Silbert, alleging that they were aware of the lender’s bankruptcy status since 2022 but failed to inform investors. Additionally, the exchange has sought to recover $1.6 billion from the bankrupt lender through legal action against Genesis.
Furthermore, U.S. regulatory bodies, including the Securities and Exchange Commission (SEC) and the New York Attorney General (NYAG), have also filed legal actions against both firms. The SEC alleges that the companies sold unregistered securities through the Earn program, while the NYAG claims that the firms defrauded investors of over $1 billion through the defunct investment program.