Cryptocurrency exchange Gemini has initiated legal proceedings against Digital Currency Group (DCG) and its CEO, Barry Silbert, accusing them of misleading creditors.

Gemini, in a court document submitted on July 7 in New York, accused DCG and Silbert of partaking in a plot that involved loaning "substantial quantities of cryptocurrency and U.S. dollars" to Genesis.

Gemini stated that it aims to recoup the losses it suffered due to "DCG’s and Silbert’s false, misleading, and incomplete representations and omissions to Gemini, and Defendants’ role in encouraging and facilitating Genesis’s fraud against Gemini."

Additionally, Gemini plans to explore legal options in relation to Genesis’ bankruptcy proceedings.

Genesis had a previous collaboration with Gemini through an Earn program but ceased withdrawals in November 2022, attributing this to “unprecedented market turmoil” before filing for Chapter 11 bankruptcy.

Also Read: Inside The FBI Raid At Crypto Tycoon, Kraken Founder Jesse Powell's LA Residence

Cameron Winklevoss, the co-founder of Gemini, shed light on the issue in a Twitter thread on July 7.

He asserted that Silbert knew that Genesis was “massively insolvent” but still endeavored to keep the Earn program active.

Winklevoss highlighted that the lawsuit incorporates claims of fabricated financial reports by DCG and Silbert, which allegedly began with the downfall of Three Arrows Capital in June 2022, causing a “$1.2 billion hole in Genesis’s balance sheet”.

"Barry, DCG, and Genesis all conspired to create false financial reports to hide the truth from Gemini and creditors.” Winklevoss further stated, “This fraud goes to the very top. Barry Silbert and other DCG executives were directly involved in these lies and they lied again and again to conceal the truth from Gemini and other creditors.”

Read Next: Atomic Wallet Hit With Lawsuit, North Korea's Lazarus Group Blamed For $100M Hack

Join Benzinga's Future of Crypto in NYC on Nov. 14, 2023 to stay updated on trends like AI, regulations, SEC actions & institutional adoption in the crypto space. Secure early bird discounted tickets now!

Photo: Shutterstock