Gemini today sued digital asset lender Genesis over who rightfully owns $1.6 billion in Grayscale Bitcoin Trust shares.
A Friday lawsuit filed in the U.S. Bankruptcy Court Southern District of New York shows that New York-based cryptocurrency exchange Gemini wants to regain control of the shares to pay back the clients of its Earn program.
Gemini and Genesis have been at war since last year because Genesis once served as a primary lending partner to the New York exchange for the Gemini Earn product. Gemini Earn allowed customers to get returns money on their crypto.
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But following the collapse of mega crypto exchange FTX and the contagion that spread across the industry last year, Genesis suspended withdrawals, and Earn customers were left wondering what happened to their cash.
Gemini is trying to get the money back to satisfy its clients.
“Today, the Collateral is worth nearly $1.6 billion, an amount that would completely secure and satisfy the claims of every single Earn User,” the Friday filing read.
“There is only one problem — Genesis,” Gemini wrote in a blog post about the lawsuit. “Genesis is the impediment to making the Earn Users whole. Genesis is seeking to take value away from Earn Users and funnel it to other creditor groups.”
Genesis is one of many companies run by crypto behemoth Digital Currency Group (DCG), which also controls the Grayscale Bitcoin Trust, the world’s largest Bitcoin fund.
Genesis Global went bankrupt in January, and last month announced it would cease all operations.
Earlier this month, New York Attorney General’s office sued DCG, its subsidiary Genesis Global Capital, and crypto exchange Gemini Trust, alleging the companies defrauded customers of $1.1 billion.
Gemini Trust is a crypto company founded by crypto moguls Cameron and Tylyer Winklevoss.
Cameron Winklevoss has alleged that DCG boss Barry Silbert has engaged in “bad faith stall tactics” to delay a resolution.
Editors note: This post was updated on Friday afternoon to add a statement from Gemini.
Edited by Guillermo Jimenez.
