Gemini legal team accuses DCG of 'gaslighting' Genesis creditors
Lawyers representing Gemini Trust filed a response in bankruptcy court to Digital Currency Group's plan claiming to offer unsecured creditors a "70–90% recovery".
Lawyers representing Gemini Trust have pushed back against a plan proposed by Digital Currency Group (DCG) for creditors of Genesis Global.
In a Sept. 15 filing in United States Bankruptcy Court for the Southern District of New York, the legal team accused DCG of gaslighting Genesis creditors through “contrived, misleading, and inaccurate assertions” in the recovery plan. The plan, filed in bankruptcy court on Sept. 13, claimed that unsecured creditors could have a “70–90% recovery with a meaningful portion of the recovery in digital currencies” while Gemini Earn users could expect an “approximately 95–110%” recovery for their claims.
According to the legal team, DCG was attempting to “bait the Gemini Lenders into accepting a deal” that would allow the company to pay less than it allegedly owed. Lawyers called on the firm to “significantly improve the terms of the loans” provided to Genesis and not use Genesis’ bankruptcy proceedings as cover for justifications in the recovery plan.
“To distract the Genesis creditors from the inconvenient facts of its facially inadequate and inequitable proposal, DCG touts proposed recovery rates that are a total mirage — misleading at best and deceptive at worst,” said the Sept. 15 filing. “Make no mistake: Gemini Lenders will not actually receive anything close in real value terms to the proposed recovery rates under the current ‘agreement in principle.’”
The legal battle involved entanglements with cryptocurrency exchange Gemini and DCG over the Gemini Earn program, financed in part by Genesis. Genesis halted withdrawals in November 2022 in the wake of FTX’s collapse, citing “unprecedented market turmoil” at the time, and filed for bankruptcy in January 2023.
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