Crypto conglomerate Digital Currency Group (DCG) is seeking the dismissal of the lawsuit brought against it and CEO Barry Silbert by the US crypto exchange Gemini in a $900 million dispute over the exchange’s Earn program that involved now-bankrupt crypto lender Genesis.
DCG filed a motion to dismiss the Gemini complaint in the United States District Court for the Southern District of New York on Tuesday, August 10, saying that it is filled with misrepresentations and a “baseless continuation of Cameron and Tyler Winklevoss’ year-long Twitter-based character assassination and public relations campaign to deflect blame from their own mismanagement.”
Gemini-DCG Standoff Explained
Gemini’s Earn Program is at the center of this saga, launched in 2021 in partnership with DCG’s crypto lender subsidiary Genesis. As part of this program, Gemini users could loan crypto to Genesis to earn interest. Genesis suddenly halted withdrawals after the implosion of FTX in November 2022, citing market turmoil.
This left a large number of Gemini users in limbo. According to the Winklevoss brothers, Genesis and DCG owed $900 million to Gemini clients. Since then, Gemini co-founders Cameron and Tylor Winklevoss have desperately tried to get this $900 million back.
Cameron Winklevoss took to the X (formerly Twitter) to force DCG CEO Barry Silbert to resolve the issue. On January 10, he wrote an open letter to Silbert to start a process. The tensions arose when Genesis Global filed for bankruptcy on January 19, 2023.
Following the bankruptcy filing, Cameron expressed his intention to sue DCG and Barry Silbert. On July 3, Cameron issued an ultimatum in another open letter asking the CEO to repay the overall $1.46 billion debt or risk facing legal consequences. This demand included a payment of $630 million that was originally due in May but remained unpaid. As part of the offer, Winklevoss asked the DCG to accept a what he called a “Best and Final Offer” by July 6.
Finally, on July 7, 2023, Gemini sued DCG and its CEO for “fraud against creditors.” Gemini claimed that Genesis was insolvent after the collapse of Three Arrow Capital (3AC). Still, the defendants continued to lie about the crypto lender’s financial health to encourage Gemini clients and other creditors to continue making loans to Genesis.
1/ Today, @Gemini filed a lawsuit against @DCGco and @BarrySilbert personally in New York court. Barry was not only the architect and mastermind of the DCG and Genesis fraud against creditors, he was directly and personally involved in perpetrating it.— Cameron Winklevoss (@cameron) July 7, 2023
In response to the lawsuit, DCG has now filed the motion to dismiss the complaint saying that Genesis is not even a defendant in the case. The lawsuit is against DCG and Barry Silbert, “neither of whom operated or oversaw the Gemini Earn program.”
The filing reads:
“Yet Genesis is not a defendant here. It filed for bankruptcy on January 19, 2023, leaving Gemini—which created and promoted the Gemini Earn program—with irate customers. Gemini and its principals—Cameron and Tyler Winklevoss—thereafter began an effort to deflect blame by contriving a public, Twitter-based character assassination campaign against Defendants. […] This Complaint is a continuation of that public relations campaign.”