Genesis wants to use the shares’ initial value in claims and is not releasing additional collateral transferred by DCG, the suit claims.Cryptocurrency exchange Gemini filed an adversary proceeding against bankrupt crypto lender Genesis Global Holdco in the Southern District of New York Bankruptcy Court on Oct. 27. At issue is the fate of 62,086,586 shares of Grayscale Bitcoin Trust .
“But it was Gemini who bore the market risk related to the Initial Collateral for the benefit of Earn Users following the foreclosure; so it follows that only Earn Users are entitled to any gain resulting from Gemini taking on that risk.” In addition, the suit alleges that Genesis' parent company, Digital Currency Group , transferred additional collateral to Genesis “for the sole purpose of immediate onward distribution to Gemini for the benefit of Earn Users,” but Genesis is proposing to use the collateral for other purposes. Gemini argued:
“A determination giving effect to the terms of the Security Agreement, confirming Gemini’s proper foreclosure on the Initial Collateral, and recognizing the Earn Users’ rights to the Additional Collateral would facilitate the return of more than $1 billion in digital assets that Genesis has wrongfully withheld from Earn Users for nearly a year.”
Gemini Earn users comprise 99% of Genesis creditors, and their claims represent 28% of all claims by value, according to the suit.Today, Gemini filed an Adversary Proceeding against Genesis in Bankruptcy Court seeking to recover $1.6 billion in value for the benefit of Earn Users. For the past 12 months, Genesis has been trying funnel this value away from Earn users to other creditors.
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