Barry Silbert and his company, Digital Currency Group (DCG), have requested a U.S. court to dismiss a lawsuit brought by the Gemini crypto exchange. The lawsuit alleges fraud against both DCG and Silbert.
The motion to dismiss argues that the lawsuit lacks substantive evidence to proceed. It argues that the liabilities from the Earn program were the responsibility of Genesis, not DCG.
DCG and Silbert claim that Gemini’s lawsuit is a continuation of a “public relations campaign” against them, involving “personal, vicious, and false” claims made on social media.
Gemini and DCG were linked through a product named Earn, which was introduced by Gemini almost two years ago. Earn aimed to offer customers returns of up to 8% on their deposits. Through this program, Gemini would lend customer funds to Genesis, a subsidiary of Digital Currency Group (DCG), to re-invest across different cryptocurrency trading desks and borrowers. However, the program was halted, and Genesis filed for bankruptcy in January 2023.
As it stands, roughly 1$ billion of Earn customers’ assets is currently inaccessible as the two crypto heavyweights battle over who is responsible. Alleging fraud against creditors, Gemini claimed that DCG and Silbert were involved in a scheme whereby large amounts of crypto and fiat money were lent to Genesis. As such, Gemini’s lawsuit accuses DCG and Silbert of making false, misleading, and incomplete representations related to its Earn program.
The motion further states that the Master Loan Agreements outlined the liabilities as the obligation of Genesis, not DCG or its affiliates. The Securities and Exchange Commission (SEC) has also filed a civil suit against both Gemini and Genesis over the Earn program, claiming the sale of unregistered securities.
“The Complaint is a hodgepodge of conclusory allegations against non-defendant Genesis, all belied by the fact that Gemini has not filed these spectacular claims in the Genesis bankruptcy. In the alternative, Gemini argues that Defendants aided and abetted Genesis’s alleged fraud through various corporate transactions and paperwork. This effort fares no better,” the complaint reads.
Since then, Barry Silbert and Cameron Winklevoss, co-founder of crypto exchange Gemini, have been engaged in a public feud over customer assets. In a series of tweets, Winklevoss asked the DCG board to remove Silbert, citing his inability to find a fair resolution with creditors of Genesis unit.
“These tweets were personal, vicious, and false, accusing Silbert of ‘foster[ing] and architect[ing] a culture of lies and deceit’ and describing a letter by Silbert as ‘another piece of carefully crafted stupidity. There are no well-pled allegations that Defendants had actual knowledge of any alleged fraud, and Gemini does no more than rely on Defendants’ corporate relationship with Genesis to argue otherwise. This Complaint is a continuation of that public relations campaign,” the motion states.
