Cryptocurrency exchange Gemini has sued crypto lender Genesis, its former business partner on the Gemini Earn program, to gain control of about $1.6 billion in Grayscale Bitcoin Trust (GBTC), according to a new court filing.
The lawsuit centers around 60 million shares of GBTC that Genesis was holding as collateral.
In a document filed with the U.S. Bankruptcy Court Southern District of New York, Gemini said that retrieving those assets would repay Earn customers, who had originally agreed to lend their money for financial reward but instead had their assets locked up when Genesis suspended withdrawals last year.
“Genesis has repeatedly taken actions to harm Earn users and to hinder and delay Earn users’ recovery of their digital assets,” wrote Gemini’s lawyers in the filing. “It is time to resolve these issues so that Genesis may move forward with a reasonable plan of reorganization and Gemini may distribute the proceeds of the collateral to Earn users.”
Last week, New York Attorney General Letitia James filed suit against Gemini, Genesis, and Genesis parent Digital Currency Group (DCG) for allegedly defrauding investors of more than $1 billion.
Genesis then told a court on Tuesday that, rather than wait for the outcome of the NY suit, the company will propose a “no deal” bankruptcy that would distribute its available assets to customers while ensuring the company could still pursue its financial complaints against parent company DCG.