Gemini Earn Users Demand Class Arbitration Against Genesis Global Group

• Three Gemini Earn users have filed a demand for class arbitration against Genesis Global Capital (GGC), its parent the Digital Currency Group (DCG), and Genesis Global Trading, alleging that the firm breached a contract and that all transactions constituted unregistered sales of securities.
• The claimants are accusing GGC of becoming insolvent in the summer of 2022 and concealing it from lenders by orchestrating a sham transaction in which DCG acquired the right to collect a $2.3 billion debt owed to GGC.
• The claimants allege that GGC’s refusal to acknowledge or fix the insolvency constituted a breach of contract, and that it triggered GGC’s obligation to return claimants’ digital assets.

Three Gemini Earn users have filed a demand for class arbitration against Genesis Global Capital (GGC), its parent the Digital Currency Group (DCG), and Genesis Global Trading, accusing the firms of breaching a contract and of selling unregistered securities.

The three users allege that GGC became insolvent in the summer of 2022, yet concealed it from lenders by orchestrating a sham transaction in which DCG acquired the right to collect a $2.3 billion debt owed to GGC by insolvent hedge fund Three Arrows Capital, for a promissory note of $1.1 billion due in 2033.

The claimants also allege that GGC’s refusal to acknowledge or fix the insolvency amounted to a breach of contract and triggered GGC’s obligation to return claimants’ digital assets. This, in turn, has necessitated the filing of a demand for class arbitration with the American Arbitration Association (AAA).

Silver Golub & Teitell, the law firm representing the claimants, released a statement on Dec. 30, 2022, confirming the filing of the demand for class arbitration. This statement also added that all transactions constituted unregistered sales of securities and must be rescinded.

The claimants are now seeking to recover their losses as a result of this alleged breach of contract, as well as to have all transactions rescinded on the grounds that they constitute unregistered sales of securities.

The outcome of this dispute is being closely watched by the cryptocurrency community, as it could set a precedent for how such disputes are handled in the future. In addition, the case could have far-reaching implications for the security of digital assets and the legitimacy of cryptocurrency trading.