Gemini Dismisses $282 Million Withdrawal as ‘Pure Fantasy’ by DCG
Cryptocurrency exchange Gemini has, in a Thursday, September 29 statement, decried the pure fantasy narrative by Digital Currency Group (DCG), alleging it withdrew $282 million that would otherwise benefit the customers. In response to the Tuesday, September 27 publication by the New York Post, Gemini labelled the withdrawal as necessary to support the liquidity reserves in Gemini Earn.
Gemini Dismisses New York Post Publication as DCG’s Fantasy
The New York-headquartered crypto exchange admitted withdrawing over $280 million from the now-bankrupt crypto bank Genesis to benefit the customers. The response dismisses the allegations advanced by the Wednesday article that ominously profiles the transaction.
The Tuesday publication claimed that Cameron and the Gemini co-founders, Tyler Winklevoss, secretly orchestrated the million-dollar withdrawal months before the embattled Genesis suspended withdrawals. It condemns that the actions by the Winklevoss twins abandoned the Gemini Earn customers to bear frozen funds.
The publication cited an anonymous source behind the whistleblowing, alleging the Winklevoss twins hurriedly withdrew money. The Post was noncommittal on whether the withdrawal was personal or corporate funds. Nonetheless, it reiterated that the secret actions left the Earn clients’ funds locked in the now-bankrupt crypto bank.
In a response published Wednesday, September 28, on X (formerly Twitter), Gemini termed the revelations as pure fantasy. Gemini would explain that the $282 million withdrawn from the Gemini Earns constituted a diversion of funds to the liquidity reserve. The X post indicated that the DCG – the Genesis parent firm, alongside the chief executive Barry Silbert, planted the narrative in the New York Post publication.
The crypto exchange response cited the agreement page on its website describing Earn’s liquidity reserve as a mechanism facilitating funding the loan callback and honoring multiple withdrawal requests. The reserve targeted holding a portion of the client’s funds designated for lending.
The X post cited that the Earn customers agreed to appoint Gemini with full authorization to adjust the reserve. Gemini labeled the $282 million withdrawal from the now-bankrupt bank as a means to increase reserves. Doing so allowed Gemini to slim the exposure it suffered when Genesis plunged into bankruptcy following the sudden FTX implosion.
Gemini regretted the irony of twisting the narrative on the decision to safeguard the Earn users’ funds by over two hundred eighty million dollars. Gemini identified the Tuesday article as DCG’s desire to manipulate public opinion against the crypto exchange.
Gemini Initiate Lawsuit Alleging DCG’s Dishonesty and Fraud
The tabloid-fueled kerfuffle constitutes the current stone-throwing game that underscores the acrimonious battle pitting Gemini against DCG, Silbert and Genesis over the funds belonging to the Earn clients.
Gemini involves a service offered by the New York crypto exchange, allowing the clients to reap 8% interest on the digital assets loaned to the now defunct crypto bank Genesis. The sudden collapse of Sam Bankman-fried FTX triggered contagious effects that dragged Genesis to freeze customer withdrawals. The crypto bank would, weeks later in January, file for Chapter 11 bankruptcy protection.
Genesis and its parent company, DCG, face a $900 million claim owed to Earn users. The two would in February reach a repayment agreement following several legal threats. DCG would fail the agreement by missing the $630 million payment.
The development would require Gemini to initiate a lawsuit alleging DCG and Silbert orchestrated fraud in July. The filing submitted by the Gemini counsel accused the duo of offering false, incomplete and misleading representations. The dishonesty regarding Genesis’s financial health convinced Gemini to terminate Earn.
DCG and Silbert Denies Ties in Earn Program
A review of the counter-accusations would aggravate last month when DCG and the chief executive filed a motion seeking the court to dismiss the lawsuit. The two claimed their noninvolvement in the Earn program. The motion indicated that Gemini failed to demonstrate that representations made by Silbert were sufficiently fraudulent.
DCG and Silbert’s counsel penned a letter supporting the application to dismiss the suit by alleging the Winklevoss brothers were advancing a character assassination campaign via their X posts. The counsel added that Gemini co-founders used Twitter-based posts to divert attention from irate clients and successfully manipulate public opinion.
Editorial credit: salarko / Shutterstock.com
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