DCG brands Gemini’s lawsuit a ‘publicity stunt’

In its lawsuit, Gemini cited a number of other prolonged measures it took before resorting to legal action against DCG

article-image

Gemini founders Cameron and Tyler Winklevoss | Debby Wong/Shutterstock modified by Blockworks

share

Gemini followed through on its self-imposed deadline to sue Digital Currency Group and its CEO Barry Silbert on Friday, marking the largest escalation yet of the company’s attempts to recoup substantial funds it says it’s owed. 

The lawsuit, filed in New York state court on Friday, said its claims are “about fraud.” The legal action alleges that DCG and Silbert “engaged in a fraudulent scheme to induce a variety of depositors, including Gemini users,” in order to “lend huge amounts of cryptocurrency and U.S. Dollars to DCG’s subsidiary Genesis Global Capital.”

Gemini claims that both DCG and Genesis “falsely represented that DCG had absorbed the losses on the 3AC loans at the parent level” and claimed it was “business as usual.” The company had floated a Thursday deadline to reach a settlement before resorting to legal action. 

Loading Tweet..

Genesis, the lending conglomerate arm of DCG, was at the time, however, insolvent, the suit said. Silbert and Gemini have been embroiled in a prolonged disagreement regarding the amounts in question. 

Following the collapse of FTX, Gemini claimed Genesis “refused to honor its obligations and suspended all withdrawals of borrowed cryptocurrency.” A $1.1 billion infusion from DCG, as it turns out, was said to be only a “promissory note that was not due until 2023.”

Gemini claims it has attempted to work toward solutions to return assets to the Gemini Earn lenders, but it has yet to find common ground with DCG or Silbert “despite paying public lip service to that goal.”

Responding to the lawsuit, DCG tweeted on Friday that the lawsuit “is yet another publicity stunt from Cameron Winklevoss to deflect blame and responsibility from himself and Gemini…any suggestion of wrongdoing by DCG or any of its employees is baseless, defamatory, and completely false.”

DCG claimed that “Gemini’s leadership was MIA” or only issued “press statements” and neither Cameron or Tyler Winklevoss “have been involved in any of the recent in-person meetings.”

Loading Tweet..

The fact that Gemini is not a creditor in Genesis’ bankruptcy proceedings led the company’s attorneys to claim their own situation is complex — one stated rationale behind the lawsuit.

The lawsuit alleges two counts: fraud and aiding and abetting fraud. 

DCG and Silbert “aided and abetted Genesis in making fraudulent misrepresentations to Gemini with respect to Genesis’s financial condition and the support it received from DCG,” the suit said.

The allegations stretch back for some time, with the suit claiming Silbert “went to great lengths to keep creditors in the dark.”

Gemini, in 2022, said it sent an email to Genesis giving a 30-day notice of the termination of the Earn Program, a yield-bearing crypto product suite. 

In October, Silbert proceeded to push for a face-to-face meeting with Tyler and Cameron Winklevoss, the co-founders of Gemini. The suit alleges that when they sat down with Silbert, he “made numerous representations designed to induce Gemini not to discontinue the Earn program,” while failing to disclose that Genesis was insolvent.

Updated July 7, 2023 at 12:20 pm ET: Added context throughout, including a statement from DCG.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

recent research

Unlocked Advisory-min.png

Research

This report distills Blockworks Advisory’s research on incentive programs and their analysis, offering a foundation for designing future initiatives and advancing industry-wide standards. By highlighting key lessons and methodologies, we aim to empower protocols to make informed, data-driven decisions.

article-image

Crypto is “really exciting,” former SEC Commissioner Paul Atkins said in a podcast interview last year

article-image

Bitcoin is now the “seventh most valuable asset in the world by market cap, just behind the likes of Google and Amazon,” GSR’s Brian Rudick said

article-image

Many analysts expected bitcoin to top $100K before year-end, though it’s been on a post-election tear

article-image

Will investors take a 10% lower return to get access to a regulated investment wrapper?

article-image

Brian Armstrong called out the hire of Gurbir Grewal, who had been the SEC’s enforcement division director since 2021

article-image

Certain senators will be interested to learn about Atkins’s private sector business interests, specifically those related to crypto