Gemini accuses Genesis of manipulating the voting process in FTX settlement

Gemini accused Genesis of manipulating the voting process for its proposed settlement with FTX after opposing its plan with DCG.

“The Debtors cannot convince their actual creditors to support their unconfirmable Amended Plan currently on file, so they have turned to the estate of the industry’s largest fraud for a friendly vote,” Gemini’s lawyers wrote.

Gemini is not alone in its opposition. The Fair Deal Group, which is a group of unsecured creditors, also filed a joinder late Thursday opposing the FTX settlement. They claim it is being forced on the creditors despite the opposition.

“The Debtors do not have the support of a single class, and plainly will need to buy some votes. Hence, the Proposed Settlement,” the Fair Deal Group wrote.

FTX and Alameda would be able to claim $175 million from the Genesis estate as part of the deal, a much lower figure than the $4 billion initially sought.

Both Gemini and the Fair Deal Group submitted their filings after the Ad Hoc Group of Genesis Lenders filed an objection to the bankrupt lenders plan with FTX, claiming that the FTX debtors “inflated” its claims.

Gemini filed an objection on Wednesday to the agreement in principle that was reached by Genesis and DCG, claiming that it was “woefully light on specifics and remains subject to definitive documentation” and that a plan incorporating the agreement would be a “dead end.”

“It requires DCG to contribute to the Debtors’ estates significantly less than what DCG currently owes, while providing DCG with releases of valuable estate claims against DCG,” lawyers continued. 

Both DCG and Genesis announced a preliminary agreement in the Chapter 11 plan for the former on Monday. DCG, under the plan, would clear its existing debts, which include a past-due unsecured loan of around $630 million — due back in May of this year — and a $1.1 billion promissory note expiring in 2032.

The repayment plan would see $328 million due in two years, and another segment of $830 million due in seven years.

Gemini and DCG — including CEO Barry Silbert and the Winklevoss twins — are currently going head-to-head in a lawsuit, after both Gemini and the Winklevoss twins accused DCG and Silbert of engaging “in a fraudulent scheme to induce a variety of depositors, including Gemini users.”

DCG, earlier this month, filed a motion to dismiss the lawsuit, claiming that the suit is rife with “misrepresentations.”

Neither Genesis nor its counsel immediately responded to requests for comment.

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