Gemini suit accuses DCG, Silbert of ‘aiding and abetting fraud’ – Crypto News – Crypto News
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Gemini suit accuses DCG, Silbert of 'aiding and abetting fraud' Gemini suit accuses DCG, Silbert of 'aiding and abetting fraud'

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Gemini suit accuses DCG, Silbert of ‘aiding and abetting fraud’ – Crypto News

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3 years ago

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Gemini followed through on its self-imposed deadline to sue Digital Currency Group and its CEO Barry Silbert on Friday, marking the largest escalation yet of the company’s attempts to recoup substantial funds it says it’s owed.

The litigation, filed in New York state court on Friday, said its claims are “about fraud.” The legal action alleges that DCG and Silbert “engaged in a fraudulent scheme to induce a variety of depositors, including Gemini users,” in order to “lend huge amounts of cryptocurrency and US Dollars to DCG’s subsidiary Genesis Global Capital.”

Gemini claims that both DCG and Genesis “falsely represented that DCG had absorbed the losses on the 3AC loans at the parent level” and claimed it was “business as usual.” The company had floated a Thursday deadline to reach a settlement before resorting to legal action.

Genesis, the lending conglomerate arm of DCG, was at the time, however, insolvent, the suit said. Silbert and Gemini have been embroiled in a prolonged disagreement regarding the amounts in question.

Following the collapse of FTX, Gemini claimed Genesis “refused to honor its obligations and suspended all withdrawals of borrowed cryptocurrency.” A $1.1 billion infusion from DCG, as it turns out, was said to be only a “promissory note that was not due until 2023.”

Gemini claims it has attempted to work toward solutions to return assets to the Gemini Earnest lenders, but it has yet to find common ground with DCG or Silbert “despite paying public lip service to that goal.”

The fact that Gemini is not a creditor in Genesis’ bankruptcy proceedings led the company’s attorneys to claim their own situation is complex — one stated rationale behind the lawsuit.

The lawsuit alleges two counts: fraud and aiding and abetting fraud.

DCG and Silbert “aided and abetted Genesis in making fraudulent misrepresentations to Gemini with respect to Genesis’s financial condition and the support it received from DCG,” the suit said.

The allegations stretch back for some time, with the suit claiming Silbert “went to great lengths to keep creditors in the dark.”

Gemini, in 2022, said it sent an email to Genesis giving a 30-day notice of the termination of the Earn Program, a yield-bearing crypto product suite.

In October, Silbert proceeded to push for a face-to-face meeting with Tyler and Cameron Winklevoss, the co-founders of Gemini. The suit alleges that when they sat down with Silbert, he “made numerous representations designed to induce Gemini not to discontinue the Earn program,” while failing to disclose that Genesis was insolvent.

This is a developing story.

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