Major crypto conglomerate Digital Currency Group (DCG) has filed a motion to dismiss a lawsuit brought by crypto exchange Gemini.
In an Aug. 10 filing with the United States District Court for the Southern District of New York, DCG’s lawyers alleged that Gemini’s allegations of fraud were part of an effort by its principals – Cameron and Tyler Winklevoss – to deflect blame.
Gemini alleged in a lawsuit filed last month that DCG and its CEO Barry Silbert had engaged in a fraudulent scheme to attract deposits into its crypto lending subsidiary Genesis, and that Silbert had concealed “a massive hole” in Genesis’ balance sheet.
DCG argued that instead, Gemini had actively encouraged its customers to lend their digital assets to Genesis as part of its Earn program, and represented that it had thoroughly vetted Genesis.
Although Gemini has attempted to hold DCG responsible for Genesis’ alleged misrepresentations, DCG’s lawyers say that as a matter of law, parent companies are not liable for the conduct of their subsidiaries.
They further argued that the Gemini complaint is a “hodgepodge of conclusory allegations” against Genesis, that has not been named as a defendant in the complaint.
According to DCG, the lawsuit is an effort by Gemini and its founders Cameron and Tyler Winklevoss to deflect blame through a Twitter-based character assassination of DCG and Silbert, despite the fact that they did not oversee the Gemini Earn program.
“These tweets were personal, vicious, and false, accusing Silbert of “foster[ing] and architect[ing] a culture of lies and deceit” and describing a letter by Silbert as “another piece of carefully crafted stupidity,” said DCG, calling the complaint a “continuation of that public relations campaign.”
Genesis owes a reported $900 million to users of Gemini Earn, who were left stranded after Genesis halted withdrawals citing “unprecedented market turmoil” following FTX’s collapse in November.
