Gemini, a crypto trust firm, has filed a lawsuit against Digital Currency Group (DCG) and its founder Barry Silbert, alleging fraud through DCG subsidiary Genesis. Gemini’s filing to the New York County Supreme Court seeks to recover funds from DCG that were tied to Gemini’s Earn program. According to the filing, Gemini entered into a partnership with Genesis which allowed its customers to earn up to 7.4% in annual percentage yield.
From the beginning, Genesis – acting in concert with Defendants and with Defendants’ active support and encouragement – induced the Gemini Earn Lenders to lend by touting Genesis’s purportedly robust risk-management practices and a supposedly thorough vetting process of the counterparties to which it re-lent the assets, the filing said. Those were lies.
The lawsuit further alleges that Silbert asked Gemini to continue its Earn program even though he was aware at the time that Genesis was massively insolvent, and took other steps to hide that Genesis had a billion-dollar hole on its balance sheet. Genesis filed for bankruptcy in January 2021.