Class Action Arbitration Complaint By Gemini Clients Is Fueled by the Genesis-DCG Loan

In reaction to Genesis Global Capital and Digital Currency Group restricting withdrawals and Gemini stopping its Earn redeeming scheme, three Gemini Earn customers have requested class action arbitration over them.

CoinDesk's parent organization is also DCG.

A class-action lawsuit is frequently considered as an alternative to class-action arbitration, a mechanism for resolving disputes between parties by a neutral third-party arbitrator. The appeal process is often informal and voluntary. Nevertheless, the arbitrator's ruling is final and can't be challenged, so it may go more quickly and cheaply than a class-action lawsuit.

According to the plaintiffs, Genesis neglected to surrender their digital content as well as those of all other Gemini Earn members as mandated by the Master Agreements between both the company and users.

They contend that Genesis first violated the Master Agreement whenever the company went bankrupt in the summer of 2022 but failed to notify its clients of the situation.

Then, they claim, Genesis entered into a phony transaction with its parent corporation, DCG, to conceal the financial ruin, swapping the right to recover a $2.3 billion debts incurred to Genesis by the now-bankrupt hedge fund Three Arrows Capital for a loan agreement with a due date of 2033 for a note with a $1.1 billion principal.

The group further argues that Genesis' Master Agreement ultimately results in unregistered securities transactions, and they are requesting the cancellation of the contracts of sale as well as compensation for their losses.

Investors Brendan Picha and Max J. Hastings also filed a class-action complaint against Gemini in late December, alleging that the exchange sold unlicensed stocks through its Earn program.

Late on Monday, DCG CEO Barry Silbert and Gemini co-founder Cameron Winklevoss had a Twitter argument about preparations to start Genesis withdrawals, with Winklevoss accusing Silbert of using “bad faith stall tactics.”

Winklevoss claims that Genesis and DCG owe $900 million to Gemini and its customers, and he gave Silbert till January 8 to make a formal commitment to resolving this issue.

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