Bankrupt crypto lender Genesis sues Gemini to recover $689M of ‘preferential transfers’

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Bankrupt crypto lender Genesis Global Capital has filed a lawsuit against cryptocurrency exchange Gemini to recover $689 million in preferential transfers, according to a Nov. 21 court filing.

The lawsuit alleges that Gemini made preferential transfers of approximately $689,302,000″ from Genesis at the expense of other creditors and requested the court to correct the unfairness.

The two crypto giants have been embroiled in a public feud after the collapse of the FTX crypto exchange over the recovery of funds that escalated into lawsuits.

Earlier, Gemini filed an adversary proceeding against bankrupt Genesis on Oct. 27 to use 62,086,586 shares of Grayscale Bitcoin Trust (GBTC). These shares were used as collateral to secure loans made by 232,000 Gemini users to Genesis through the Gemini Earn Program. The collateral value grew to $1.6 billion as per current market conditions.

Genesis filed for bankruptcy in January earlier this year after suspending withdrawals in November 2022. The Genesis bankruptcy had an adverse effect on the Gemini Earn program, leading to the crypto exchange suing Genesis parent company DCG and its CEO Barry Silbert for fraud in connection with the Earn program in July. 

Later In September, Genesis also sued its parent company, DCG, seeking the repayment of multiple loans worth over $600 million.

This is a developing story, and further information will be added as it becomes available.