DCG fraudulently covered up 3AC-induced insolvency: Gemini lawsuit
Gemini has filed a lawsuit against Digital Currency Group ( DCG ) and its chief Barry Silbert for alleged fraud . Gemini had partnered with DCG for its Gemini Earn program, which involved Gemini giving customer deposits to Genesis Global Capital, a DCG subsidiary, to be lent out in order to earn yield. Genesis Global Capital filed for bankruptcy earlier this year, several months after closing withdrawals amid the collapse of FTX and Alameda Research. The lawsuit specifically alleges that Genesis misrepresented its risk management process by making huge loans to irresponsible counter parties, including Three Arrows Capital (3AC), motivated in part by those counter parties benefiting the Grayscale Bitcoin Trust (GBTC), another DCG subsidiary. The lawsuit details loans to 3AC totaling $2.3 billion and suggests that the collateral for this trade was valued at less than 50% of the loan total. A portion of this collateral was actually shares of GBTC. 3AC’s trading strategy during...