Gemini clients file a class action arbitration against Genesis after the company halts withdrawals on its ‘Earn’ lending product. This was because of their exposure to FTX and DCG taking a $1.675 billion loan from Genesis, which they misused. Genesis breached its master agreement with Gemini and also hid its insolvency from the company. Gemini is in deep trouble now as Cameron Winklevoss calls out Barry Silbert for DCG’s actions on Twitter.
Three Gemini clients file a class action arbitration against Genesis
A class-action arbitration is different from a class-action lawsuit, as, in this process, a 3rd party is responsible for resolving the dispute between two parties. In this, the decision of the 3rd party is final and cannot be appealed. This makes the process faster, cost-effective and simpler.
The clients of Gemini that filed the case claim that Genesis breached the Master agreement with Gemini when they paused withdrawals. They also breached the agreement when even after becoming insolvent, they hid it from their customers.
Genesis tried to hide this situation by engaging in unfair practices with its parent company DCG. They exchanged the right to collect $2.3 billion from the bankrupt Three Arrows Capital with DCG for a $1.1 billion promissory note due in 2033.
Lawsuit against Gemini
Alongside the arbitration case, a class-action lawsuit was also filed against Gemini by investors allegedly saying that they were involved in selling unregistered securities via its Earn product. The lawsuit also says that after the crypto market downfall, Genesis could not keep its promise of redemptions from Gemini, which resulted in the exchange being unable to honour the redemptions from its customers.
About the Earn product from Gemini
Gemini debuted its “Gemini Earn” product at the beginning of February 2021. Users of this service are able to purchase bitcoin, hold it on “Earn,” and earn compound interest. The rates offered by Gemini Earn are comparable with those of the present market, around 8%. Additionally, there are no costs for moving cryptocurrency into or out of their Earn platform, which reduced the entry barrier in the platform.
What are your thoughts as Gemini clients file class action arbitration case against Genesis? And who do you think is at fault here? Let us know in the comments below. And, if you found our content informative, share it with your family and friends.
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