Three Gemini Earn users have accused Genesis Global Capital of breaching a contract and have subsequently filed a demand for class arbitration with the American Arbitration Association. In addition, the three users assert that all transactions “constituted unregistered sales of securities” and therefore must be rescinded.
‘A Sham Transaction’
A demand for class arbitration in a case that pits three Gemini Earn users against Genesis Global Capital (GGC), its parent the Digital Currency Group (DCG), and Genesis Global Trading has been filed with the American Arbitration Association (AAA). According to a statement released by Silver Golub & Teitell, the law firm representing the claimants. GGC and the related entities are accused of breaching the terms of the so-called Master Agreement.
According to the Dec. 30, 2022 statement, the claimants allege the initial breach of contract “when GGC became insolvent in the summer of 2022 but concealed its insolvency from lenders.” The statement adds that GCC was able to achieve this by “orchestrating a sham transaction” in which DCG acquired the right to “the right to collect a $2.3 billion debt owed to GGC by insolvent hedge fund Three Arrows Capital for a promissory note of $1.1 billion due in 2033.”
Genesis Global Capital Accused of Selling Unregistered Securities
To the claimants, GCC’s refusal to acknowledge or fix the insolvency amounted to a breach of contract. In addition, claimants assert that this alleged insolvency constituted an “Events of Default which automatically terminated the loans between claimants and GGC thus triggering GGC’s obligation to return claimants’ digital assets.”
The statement added:
Claimants also allege that GGC further breached the Master Agreement beginning on November 16, 2022, as GGC has refused to return Gemini Users’ digital assets despite Gemini Users’ requests for redelivery of loaned assets pursuant to the Master Agreement and failed to pay Gemini Earn users the interest payments due under the Master Agreements at the end of November.
As previously reported by Bitcoin.com News, GGC’s affiliate Genesis Global Trading (GGT) froze withdrawals and new loan originations on Nov. 16, and according to a company spokesperson this decision was “made in response to the extreme market dislocation and loss of industry confidence.” At the time, the spokesperson insisted the decision had no impact on DCG and its other entities.
Meanwhile, in addition to the breach of contract allegations, claimants also argued that “all transactions entered into pursuant to the Master Agreement constituted unregistered sales of securities.” Consequently, the claimants want the contracts of sale rescinded on that basis.
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Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.
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Source : Bitcoin
