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Gemini Accuses Barry Silbert’s DCG of Fraud: Allegations of Financial Losses and Misleading Information


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Gemini Accuses Digital Currency Group of Fraud in Cryptocurrency Exchange Dispute

Gemini, a popular cryptocurrency exchange founded by Tyler and Cameron Winklevoss, has accused Barry Silbert’s Digital Currency Group (DCG) of fraudulent activities. The exchange claims that DCG is attempting to avoid responsibility for damages caused by its Earn product.

Gemini Takes Legal Action Against DCG

Gemini has filed a court document on September 15, alleging that DCG is engaging in misleading and inaccurate assertions to shift blame and escape liability. The legal action is a direct response to a recent statement by DCG regarding a proposed agreement involving the debtors and unsecured creditors.

Allegations Surrounding a $1.1 Billion Promissory Note

Gemini’s allegations center around DCG’s creation of a $1.1 billion promissory note, which the exchange claims was an attempt to conceal significant financial losses resulting from the collapse of Three Arrows Capital. These allegations raise concerns about transparency and financial integrity within the cryptocurrency industry, especially as regulatory scrutiny continues to grow.

Gemini asserts that DCG intentionally concealed the true terms of the promissory note, misleading Gemini’s creditors. Additionally, Gemini claims that DCG borrowed a significant amount of Bitcoin from Gemini instead of delivering the expected capital. These allegations deepen the legal dispute and cast doubt on the actions of a major player in the cryptocurrency space.

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Gemini Demands Repayment of Debt

Gemini further asserts that DCG has failed to fulfill its obligation to repay over $630 million borrowed from the company, with the repayment deadline already overdue by several months.

DCG’s Response and Gemini’s Position

In response to Gemini’s allegations, DCG has proposed a credit extension involving Genesis’ creditors, including Gemini. However, Gemini has made it clear that it will object to this proposal and insists that DCG fulfill its obligations by providing fair and just compensation to creditors.

Gemini also accuses DCG of employing tactics to wear down creditors and pressure them into accepting reduced settlement amounts. Despite these challenges, Gemini remains steadfast in seeking a fair resolution rather than succumbing to such pressures.

Regulatory Scrutiny of Cryptocurrency Exchanges

Cryptocurrency exchanges, including Gemini, have faced increased regulatory scrutiny. In January 2023, the US Securities and Exchange Commission (SEC) charged Genesis Global Capital and Gemini Trust Company with the unregistered offer and sale of securities through the Gemini Earn program.

The SEC alleges that Genesis and Gemini raised billions of dollars from retail investors through this unregistered offering, promising high returns but leaving investors in limbo when withdrawals were frozen. Other major cryptocurrency exchanges, such as Coinbase, Binance, and Kraken, have also faced regulatory challenges in recent months.

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