- Genesis promised over 60 million GBTC shares as collateral to Gemini Earn users, but Genesis still holds most of these shares. Gemini argues these shares should not be used to repay other Genesis creditors.
- Genesis filed for bankruptcy after the FTX collapse, leading it to be unable to meet withdrawal requests. The GBTC shares were offered as collateral on loans by Genesis.
- Through a lawsuit, Gemini wants legal clarity that Genesis has no rights to the GBTC shares, as they were promised as collateral to Gemini Earn users specifically.
Gemini Trust Co. has filed a lawsuit against Genesis Global Holdco LLC regarding shares in the Grayscale Bitcoin Trust worth nearly $16 billion. The lawsuit aims to determine the rightful owner of these shares.
Background on the Dispute
Genesis promised over 60 million GBTC shares as collateral to users of Gemini‘s Earn product. Most of these shares are still held by Genesis or its affiliates. Gemini argues these shares should not be used to repay other Genesis creditors.
Genesis Files for Bankruptcy
Genesis filed for bankruptcy earlier this year after the collapse of crypto exchange FTX. This led to Genesis being unable to meet withdrawal requests from customers. The GBTC shares were offered as collateral on loans provided by Genesis.
Gemini Seeks Legal Clarity
Through its lawsuit, Gemini wants a judge to confirm Genesis has no rights to the GBTC shares. Gemini contends the shares were promised as collateral to its Earn users and should not be available to Genesis’ other creditors.
The Importance of the Grayscale Bitcoin Trust
The Grayscale Bitcoin Trust allows investors exposure to bitcoin through a traditional investment vehicle without directly holding cryptocurrency. The trust’s shares are publicly traded, making it popular among institutional investors.
The lawsuit centers on determining the ownership rights to GBTC shares worth billions promised as collateral by Genesis. The outcome carries major implications for Genesis creditors and Gemini Earn users amid Genesis’ bankruptcy proceedings.