In a dramatic turn of events, bankrupt cryptocurrency lender Genesis has launched a new legal action against its longtime rival Gemini. The lawsuit alleges that Gemini received an “unfair preferential transfer” of approximately $700 million shortly before the company declared bankruptcy.
The complaint, filed Nov. 21, claims the transfers materially prejudiced the interests of Genesis’ other creditors and seeks recovery.
New revelations from the Genesis lawsuit
According to the filing, the cryptocurrency lender claims that Gemini withdrew a total amount of no less than $689,302,000 from Genesis in the 90 days prior to its Chapter 11 bankruptcy proceedings.
This action allegedly “purportedly benefits” Gemini at the expense of other creditors and continues to provide an advantage by retaining the disputed property.
The complaint seeks the remedies available under the Bankruptcy Code to correct the perceived injustices and restore equality among Genesis’ creditors.
The lawsuit was filed under 11 U.S.C. §§ 547, 550, and 502, with Genesis seeking a judgment to avoid a prior assignment, directing Gemini to abandon the assigned property or compensate the company for its value, and an injunction against any Gemini claim.
Genesis is conducting an ongoing investigation and, based on information currently available, has determined that the transfers made during the 90-day priority period were avoidable under section 547 of the Bankruptcy Code.
Records of transfers to Gemini prior to bankruptcy. Source: Genesis lawsuit
The Company reserves the right to amend the Complaint to include additional assignments or parties discovered in the adversary proceeding to ensure that the recovery sought is comprehensive.
Bankruptcy battle reveals alleged wrongdoing
The lawsuit sheds light on potential wrongdoing by Gemini in allegedly receiving preferential transfers, which Genesis believed were intended to repay prior debts when the cryptocurrency lender became insolvent.
The bankruptcy filing estimates that general unsecured creditors’ claims against the Genesis estate will be less than the full value, an indication of the potential impact of the disputed transfer on the overall distribution.
If the court rules in Genesis’ favor, avoiding and reinstating the transfer would help restore the balance among creditors and resolve the preferential treatment issues alleged by Gemini.
The outcome of the lawsuit could have far-reaching implications for the future of both companies and the broader landscape of the cryptocurrency industry.
As the legal proceedings unfold, the crypto community eagerly awaits further developments in this high-stakes conflict between Genesis and Gemini, which could impact the regulatory framework for preferential transfers in the crypto lending space.
The total cryptocurrency market cap on the daily chart is between $1.35 and $0.138 trillion. #Genesis #Gemini
