Digital asset exchange Gemini says venture capital firm Digital Currency Group (DCG) is engaging in deceptive practices to avoid fulfilling its full obligations to the creditors of its crypto lending unit Genesis.
In July, Gemini a lawsuit against DCG after Genesis went bankrupt while owing $735 million worth of assets to users of Gemini Earn, a program that enabled the exchange’s customers to lend their cryptocurrencies and earn interest.
On September 13th, DCG proposed an agreement offering unsecured creditors, including Gemini Earn users, to recover a significant portion of their funds.
“The transactions described in the Proposed Agreement would provide, based on the Debtors’ estimates, unsecured creditors a 70-90% recovery with a meaningful portion of the recovery in digital currencies…Notably, Gemini Earn users are estimated to recover approximately 95%-110% of their claims.”
In a new court filing on Wednesday, Gemini DCG’s proposed recovery rates are “misleading at best and deceptive at worst.”
“Make no mistake: Gemini Lenders will not actually receive anything close in real value terms to the proposed recovery rates under the current ‘agreement in principle.’”
Genesis says DCG is trying to shortchange Gemini lenders as the proposed deal would allow the firm to pay less than what it owes.
“Through the DCG Statement, DCG continues its campaign of contrived, misleading, and inaccurate assertions in an attempt to gaslight creditors of the Genesis estate generally, and the Gemini Lenders specifically, and escape responsibility for the harm it has caused them.
Receiving a fractional share of interest and principal payments over seven years from an incredibly risky counterparty (that has already proven itself willing to default on its obligations and bankrupt a subsidiary) is not even remotely equivalent to receiving the actual cash and digital assets owed today by Genesis to the Gemini Lenders. ”
