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Gemini Exchange Sues Genesis Global Over $1.6 Billion Dispute

New York-based cryptocurrency exchange Gemini has filed a lawsuit against Genesis Global, seeking to recover $1.6 billion owed to Earn Users. The dispute began in 2022 when Gemini requested Genesis to provide security for loans taken by Earn Users. Genesis pledged 62 million shares of Grayscale bitcoin Trust as collateral, valued at $1.6 billion. Gemini claims to have only received $284.3 million from foreclosing on the collateral, while Genesis disputes this. Gemini argues that Genesis is denying Earn Users access to millions in post-foreclosure appreciation. Genesis has suspended Earn User withdrawals, freezing over $1 billion in digital assets. Gemini seeks the court’s confirmation of the legitimacy of its foreclosure and Earn Users’ rights to additional collateral.

Background and Dispute

New York-based cryptocurrency exchange Gemini has officially initiated legal action against Digital Currency Group’s (DCG) Genesis Global in the Southern District of New York Bankruptcy Court. The lawsuit seeks to recover $1.6 billion owed to Earn Users caught in the dispute. Gemini requested Genesis to provide security for loans taken by Earn Users in 2022. Genesis pledged 62 million shares of Grayscale bitcoin Trust (GBTC) as collateral, valued at $1.6 billion. Gemini claims to have only received $284.3 million from foreclosing on the collateral, while Genesis disputes this.

Genesis Denying Access to Millions

Gemini further argues that Genesis has refused to remit the rest of the collateral worth over $800 million, which also belongs to Earn Users as per the security agreement. Gemini believes Genesis is trying to deny Earn Users access to millions in post-foreclosure appreciation. If Genesis successfully challenges Gemini’s foreclosure, Earn Users would be forced to share the appreciation of hundreds of millions of dollars, despite transferring the collateral to Gemini for the users’ sole benefit.

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Genesis Freezes $1 Billion in Assets

Last November, Genesis suspended Earn User withdrawals, freezing over $1 billion in digital assets. Gemini claims that Genesis directed the frozen assets to other creditors as part of its reorganization efforts after suffering a major financial blow. Gemini’s lawsuit seeks to confirm the legitimacy of its foreclosure and Earn Users’ rights to the additional collateral. It also aims to halt Genesis’s proposed reorganization plan to prevent value diversion from Earn Users to other creditors.



### News source: zycrypto.com

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