In a statement released by Silver Golub & Teitell, the law firm representing the three claimants, Genesis breached the terms of its Master Agreement when Gemini suspended its Earn redemption program due to Genesis freezing withdrawals.
According to the claimants, Genesis Global Capital initially breached the contract “when GGC became insolvent in the summer of 2022 but concealed its insolvency from lenders.” Genesis did not disclose its insolvency until November 2022.
They further claimed that Genesis was involved in a “sham transaction.” This occurred when its parent company DCG acquired “the right to collect a $2.3 billion debt owed to GGC by insolvent hedge fund Three Arrows Capital for a promissory note of $1.1 billion due in 2033.”
The statement accused Genesis Global Capital of selling unregistered securities as the insolvency automatically terminated the loans, triggering GGC’s obligation to return claimants’ digital assets.
They claim that the continuous sale after insolvency creates unregistered securities. Another lawsuit was also filed against Gemini by Brendan Picha and Max J. Hastings for offering unregistered securities via its Gemini Earn program.
The arbitration filed by the Gemini Earn users against GGC seeks to rescind the contracts of sale and related damages.
The insolvency of Genesis is also covered in:
Genesis Sought a $1 Billion Emergency Loan Before Halting Withdrawals
Genesis Global’s Debt Volume Rises to $1.8 Billion, Could Grow Even Higher
See original on DailyCoin
Source: Cryptocurrency - investing.com
