Gemini Trust Company, a cryptocurrency exchange and regulated trust, lodged a lawsuit against the now-bankrupt Genesis Global Holdco LLC, a cryptocurrency lender, over the rightful ownership of the Grayscale Bitcoin Trust (GBTC).
Gemini seeking $1.6bn Grayscale Bitcoin Trust pound of flesh from Genesis
This trust currently holds a value of approximately $1.6bn. In the filed lawsuit, Gemini petitions the court to cast a ruling stating Genesis has no right to the GBTC shares earmarked as collateral to users of the Gemini Earn product.
Genesis or its partners still holds most of the shares in question. Gemini feels these should not be used to settle the Genesis debts after the company’s demise.
Gemini made this legal move just days after Genesis announced it was pulling out of a draft settlement agreement with its parent company, Digital Currency Group. Instead, Genesis plans to sue the latter. The stated agreement was key to a debt settlement scheme.
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The cryptocurrency exchange indicated the problems started when, in 2022, Gemini insisted Genesis secure all Earn Users’ loans. Genesis committed to deliver more than 62 million GBTC shares as collateral for those loans.
Gemini accuses Genesis of funnelling away these funds to creditor settlements. With the lawsuit, Gemini aims to shed light on the value of its claims against Genesis and access the shares to repay its customers.
When approached by Bloomberg on Friday, Genesis did not offer an immediate response. In the lawsuit, the Gemini lawyers wrote:
It is time to resolve these issues so that Genesis may move forward with a reasonable plan of reorganisation and Gemini may distribute the proceeds of the Collateral to Earn Users.
