Why DCG’s larger-than-life recovery proposal is under fire? Another agency to get a bashing in court? What is going on with the bankrupt firm let’s delve in. The legal feud between Gemini Trust and Digital Currency Group (DCG) has escalated as lawyers representing Gemini strongly criticized DCG’s proposed recovery plan for creditors of Genesis Global in a filing with the United States Bankruptcy Court for the Southern District of New York.
Exposing A Controversial Plan, Here’s What Gemini Finds Out
What is more concerning is that Gemini’s legal team has found a loophole in the DCG’s recovery plan. Based on their theory DCG has given a malicious plan “contrived, misleading, and inaccurate assertions”. Whereas, DCG’s proposal suggested that unsecured creditors could potentially recover between 70% to 90% of their claims, with a substantial portion in digital currencies. For Gemini Earn users, the recovery estimate ranged from approximately 95% to 110% of their claims.
Questionable Figures?
However, Gemini Trust’s legal representatives dismissed these figures as a “total mirage” and alleged that DCG was attempting to persuade creditors to accept a deal that would pay them less than their owed amounts. In their argument, they urged DCG to “significantly improve the terms of the loans” provided to Genesis and refrain from using Genesis’ bankruptcy proceedings as a cover for justifications in the recovery plan.
FTX Collapse and Its Ripple Effects
This might go on as the ongoing legal battle centers on cryptocurrency exchange Gemini’s involvement with Genesis and DCG in the Gemini Earn program. Genesis had suspended withdrawals in November 2022 amid market turmoil caused by FTX collapse and subsequently filed for bankruptcy in January 2023. Gemini took action by filing a claim seeking the recovery of assets for its approximately 232,000 Earn users and initiated a lawsuit against DCG and its CEO, Barry Silbert, alleging fraud.
Gemini Responded DCG Deliberately Delayed the Process
Cameron Winklevoss, co-founder of Gemini, accused Barry Silbert of being the mastermind behind fraudulent activities involving DCG and Genesis against creditors. Gemini Trust argues that DCG’s tactics have impeded fund distribution to Gemini Lenders, despite a $100 million offer for a quick resolution from the founders, further complicating the situation. On the flip side, in January, the SEC filed a civil suit against Gemini and Genesis, alleging the sale of unregistered securities. Although a motion to dismiss was filed in May, the case remains ongoing.
DCG’s up to? Going to resolve?
Surprisingly, DCG is proposing to renegotiate a $630 million loan between Genesis and itself, potentially streamlining the process. While some portion of this loan may be repaid in cash upon transaction closure, while the rest could be structured as a two-year note. The next critical step is a vote by DCG’s creditors, which will ultimately decide the plan’s outcome. The crypto community is eagerly awaiting the resolution of this intricate legal battle.
