Digital Currency Group and its Chief Executive Officer Barry Silbert asked a US court to throw out a lawsuit by the Winklevoss twins’ crypto exchange Gemini Trust Inc. that accuses the company and its leader of fraud.
(Bloomberg) — Digital Currency Group and its Chief Executive Officer Barry Silbert asked a US court to throw out a lawsuit by the Winklevoss twins’ crypto exchange Gemini Trust Inc. that accuses the company and its leader of fraud.
DCG and Silbert filed a motion to dismiss in Manhattan federal court Thursday, claiming Gemini fails to properly claim fraud and accusing the company and founders Cameron and Tyler Winklevoss of engaging in a “character assassination campaign” against DCG and Silbert.
Gemini sued DCG and Silbert last month in New York, alleging they engaged in “fraud and deception.” The dispute stems from DCG crypto lending unit Genesis Global Holdco’s decision in November to freeze withdrawals, which left hundreds of millions of dollars worth of Gemini customer assets trapped.
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Through the Gemini Earn program, its clients could earn interest on their crypto deposits by lending them out through Genesis Global. When Genesis filed for bankruptcy in January, Gemini became one of its biggest creditors. After months of trying to negotiate a settlement with Genesis and DCG, Gemini filed its lawsuit in state court in July. The case has since been moved to federal court.
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The motion to dismiss claims Gemini has failed to properly allege fraud or knowledge of fraud by DCG or Silbert. It also says that neither DCG nor its CEO operated or oversaw the Gemini Earn program.
Gemini said in its lawsuit that Genesis — “acting in concert with defendants and with defendants’ active support and encouragement” touted its supposedly robust risk-management practices and vetting process of counterparties. “Those were lies,” the Gemini lawsuit alleged.
The company is seeking to recover “damages and losses” the crypto exchange incurred “as direct result of DCG’s and Silbert’s false, misleading, and incomplete representations and omissions to Gemini,” its lawsuit said. In May, Gemini had asserted a claim on behalf of Gemini Earn users for more than $1.1 billion.
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Both Gemini and Genesis Global were sued in January by the US Securities and Exchange Commission over the Earn program, which the regulator alleges amounted to an offering of unregistered securities. The companies filed to dismiss the suit in May.
The case is: Gemini Trust Co. V. Digital Currency Group Inc., 23-cv-06864, US District Court, Southern District of New York (Manhattan).
–With assistance from Bob Van Voris.
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