Digital Currency Group Wants ‘Hodgepodge’ Gemini Lawsuit Tossed Out

Digital Currency Group (DCG) and CEO Barry Silbert filed a motion on Thursday to dismiss a lawsuit brought by Gemini Trust Company last month.

Gemini accused DCG and Silbert of making “false, misleading, and incomplete representations” to Gemini after Genesis—which is owned by DCG—filed for Chapter 11 bankruptcy in January.

Gemini’s complaint included an allegation that Silbert knew Genesis was “massively insolvent” after it sustained hefty losses from the collapse of crypto hedge fund Three Arrows Capital last year. 

But Silbert hid that information from one of Gemini’s co-founders during a lunch meeting and urged Gemini to continue with the Gemini Earn program instead, the complaint alleged.

On Thursday, DCG and Silbert’s counsel said Gemini failed to explain why the presentation made by Silbert was supposedly fraudulent. As for other allegations, the defendants’ counsel claimed it concerned Genesis and not DCG or Silbert.

“The rest of the complaint is a hodgepodge of conclusory allegations against non-defendant Genesis,” a letter supporting the motion said, adding the claims should’ve been filed in Genesis’ bankruptcy case. “These allegations against Genesis have no legal bearing on the claims against the actual Defendants in this case.” 

Genesis was the primary partner of Gemini Earn, a service offered by Gemini that let customers earn interest on crypto loaned out to the firm. Genesis suspended customer withdrawals amid the collapse of FTX last November.

Gemini was co-founded by Tyler and Cameron Winklevoss, who have shared frustrations with Silbert publicly on Twitter. In July, before the lawsuit was filed, Cameron Winklevoss issued a “final offer” over Genesis’ debt-restructuring negotiations.

In the letter supporting the defendants’ motion to dismiss, DCG and Silbert’s counsel said the Winklevoss twins have engaged in a “Twitter-based character assassination campaign” to deflect the blame of “irate [Gemini Earn] customers.”

The letter claimed that DCG and Silbert had “virtually nothing to do with the Gemini Earn program” and are not liable under an agreement each Gemini Earn customer entered into with Gemini and Genesis.