Gemini, the US-based cryptocurrency exchange platform, has filed a court document accusing Digital Currency Group (DCG) of engaging in fraudulent activities and attempting to evade responsibility for the harm caused to creditors. The filing was made in response to a statement made DCG regarding a proposed agreement between DCG, the debtors, and the Official Committee of Unsecured Creditors.
Gemini alleges that DCG created a $1.1 billion promissory note to conceal the significant financial losses caused the collapse of Three Arrows Capital (3AC). However, the terms of the note were allegedly kept hidden, leading to misleading representations to Gemini’s creditors. Additionally, Gemini claims that DCG borrowed a large amount of Bitcoin (BTC) from the company instead of providing the necessary capital.
Gemini also asserts that DCG is now refusing to repay the more than $630 million it borrowed from the company, which was due in May. In response, Gemini vows to fight against DCG’s proposal that would require Genesis creditors, including Gemini, to extend credit to DCG. Gemini believes that DCG should pay creditors a fair and adequate amount.
Gemini accuses DCG of attempting to wear down creditors over the past ten months in the hopes that they would settle for a significant reduction in the amount owed. However, Gemini remains determined not to succumb to these tactics and will continue to pursue a fair resolution.
Gemini further criticizes DCG’s proposed recovery rates, claiming they are misleading and deceptive. The company argues that receiving fractional shares of interest and principal payments over seven years from a risky counterparty is not equivalent to receiving the actual cash and digital assets owned Genesis. Gemini demands that DCG improve the terms of the loans it provides in order to gain the support of the affected individuals.
Gemini accuses DCG of being responsible for its subsidiary’s insolvency and sacrificing the exchange and its creditors to shield itself from liability. Despite Gemini’s offer of a $100 million premium for a swift resolution, DCG’s delay tactics have hindered the progress in distributing funds to Gemini Lenders.
Gemini’s court filing comes after months of negotiations with DCG and the collapse of the Gemini Earn program, which resulted in lawsuits and severed ties between the two entities.
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