Aug 10, 2023 - Economy

Digital Currency Group, Silbert ask court to dismiss Gemini lawsuit

Illustration of two 8-bit fists hitting each other.

Illustration: Gabriella Turrisi/Axios

Digital Currency Group (DCG) on Thursday filed a motion to dismiss a lawsuit that Gemini Trust Co. filed in July against it and its chief Barry Silbert.

Catch up quick: Gemini, the crypto exchange founded by Cameron and Tyler Winklevoss, alleged in its suit that DCG and Silbert misrepresented the accounting treatment of liabilities that DCG took over from its lending unit, Genesis Global, after the collapse of crypto firm Three Arrows Capital.

The big picture: The fight between Gemini and DCG stems from Gemini's partnership with Genesis, through which it offered a rewards program to the latter's Earn customers.

  • Earn customers — and their assets — have been in limbo since November, when Gemini halted the program as a result of Genesis' halting its own services and then filing for bankruptcy.
  • Of note: The SEC also sued Genesis and Gemini over the Earn program, alleging they violated federal securities laws.

What they're saying: DCG says in the motion to dismiss the case that Gemini's suit is part of an ongoing "public relations campaign" and "an effort to deflect blame."

  • DCG argues that the Master Loan Agreements underpinning the Gemini Earn program involved its subsidiary Genesis — not DCG.
  • Each MLA signed by Gemini Earn customers outlined that liabilities that arise from said agreements are the sole obligation of Genesis, not DCG nor any of its affiliate businesses, according to the filing.
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