Gemini, the cryptocurrency exchange, recently filed for an adversary proceeding against Genesis Global Holdco, the bankrupt crypto lender, in the Southern District of New York Bankruptcy Court on the 27th of October. The issue on hand is the fate of 62,086,586 shares of GBTC or the Grayscale Bitcoin Trust. They were being used as some form of collateral in order to secure the loans made by 232,000 users of the exchange to Genesis through the Earn Program.
The collateral, for those who are wondering, is worth close to $1.6 billion. According to the suit, the exchange has received around $284.3 million from foreclosing on the collateral which would benefit the users of Earn, but Genesis has already disputed the action- which prevents the crypto exchange from distributing the proceeds.
Gemini Going Head To Head Against Genesis
Against Gemini, Genesis has also gone on to propose utilizing the initial value of the collateral- which would be more than $800 million- in order to determine the deficiency of the Earn Users’ claim rather than the actual foreclosure value. Considering the foreclosure value is considerably greater than the initial value, Genesis would thus be freeing up hundreds of millions of dollars for distribution to the other creditors.
Incidentally, the suit has also alleged that the parent company of Genesis, Digital Currency Group, also transferred some additional collateral to Genesis simply for the purpose of immediate onward distribution to Gemini for the benefit of the Earn Users- but Genesis would be proposing the usage of the collateral for other purposes. The Gemini Earn users also comprise 99% of Genesis creditors, and the claims also represent around 28% of all of the claims by value- as mentioned by the suit.
