Digital asset exchange Gemini says venture capital firm Digital Valuta Group (DCG) is engaging in deceptive practices to avoid meeting its full obligations to the creditors of its crypto lending unit Genesis.
In July, Gemini filed a lawsuit against DCG after Genesis filed for bankruptcy while owing $735 million in assets to users of Gemini Earn, a program that allowed the exchange’s customers to lend out their cryptocurrencies and earn interest.
On September 13, DCG proposed an agreement that would allow unsecured creditors, including Gemini Earn users, to recover a significant portion of their money.
“The transactions described in the Proposed Agreement would, based on the Debtors’ estimates, provide unsecured creditors with a recovery of 70-90%, with a meaningful portion of the recovery in digital currencies… Notably, it is estimated that Gemini Earn users will recover approximately 95%. 110% of their claims.”
In a new court filing on Wednesday, Gemini says DCG’s proposed recovery rates are “misleading at best and deceptive at worst.”
“Make no mistake: Gemini Lenders will not receive anything in fair value close to the proposed recovery rates under the current ‘agreement in principle.’”
Genesis says DCG is trying to short-change Gemini lenders because the proposed deal would allow the company to pay less than what it owes.
“Through the DCG Statement, DCG continues its campaign of fabricated, misleading and inaccurate claims in an attempt to defraud and defraud the creditors of Genesis’ estate in general, and the Gemini Lenders in particular. escape responsibility for the harm it has caused them.
Receiving a fraction of the interest and principal payments over a seven-year period from an incredibly risky counterparty (which has already proven itself willing to default on its obligations and bankrupt a subsidiary) is not even a remote vert equal to receiving the actual cash and digital assets due today Genesis for the Gemini lenders. ”
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