Cryptocurrency firm Genesis Global Capital has filed a new lawsuit against exchange Gemini Trust for more than $689 million.
The lawsuit states that Gemini performed a preferential transfer of total funds of approximately $689,302,000 from Genesis and did this through the transaction at the expense of other lenders. Genesis had to go to court to recover these funds.
According to Coindesk, Genesis and Gemini, who were once partners, have long been unable to resolve issues and settle the process of returning the loan funds after the collapse of the FTX exchange.
Genesis filed for bankruptcy in January 2023, and in July, Gemini sued Digital Currency Group (DCG), which owns Genesis. DCG refused to settle, calling the allegations of defrauding creditors defamatory.
In September, Genesis demanded that DCG repay more than $600 million in loans. After this, Gemini went to court, demanding 60 million shares of Grayscale Bitcoin Trust (GBTC) worth $1.6 billion from Genesis.
The U.S. Securities and Exchange Commission intervened in these legal battles. The SEC brought enforcement actions because Genesis and Gemini sold unregistered securities days before filing for bankruptcy. Authorities have filed lawsuits against DCG, Genesis, and Gemini for the scheme to defraud more than 230,000 investors of more than $1 billion.
The lawsuit filed by New York Attorney General Letisha James alleges that Gemini made unprecedented withdrawals of funds in the midst of the collapse of LUNA and TerraUSD before filing for bankruptcy. Gemini demanded repayment of Genesis' previous loans, but these were avoidable because Genesis was "insolvent". In fact, Gemini withdrew hundreds of millions of dollars from Genesis months before the company froze deposits and filed for bankruptcy.
Also read: Binance saw a significant outflow of funds.
