• Three Gemini Earn users have filed a demand for class arbitration against Genesis Global Capital, its parent the Digital Currency Group, and Genesis Global Trading.
• The claimants allege that GGC breached the terms of the Master Agreement by becoming insolvent in the summer of 2022 but concealing it from lenders and orchestrating a sham transaction in which DCG acquired the right to collect a $2.3 billion debt for a promissory note of $1.1 billion due in 2033.
• The claimants also assert that all transactions constituted unregistered sales of securities and must be rescinded.

Three Gemini Earn users recently filed a demand for class arbitration against Genesis Global Capital (GGC), its parent the Digital Currency Group (DCG), and Genesis Global Trading, alleging breach of contract and unregistered sales of securities. The case was filed with the American Arbitration Association (AAA) and is being represented by Silver Golub & Teitell.

According to the claimants, GGC’s breach of contract began when it became insolvent in the summer of 2022 but concealed its insolvency from lenders. The claimants allege that GGC was able to do this by orchestrating a sham transaction in which DCG acquired 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.

The claimants assert that GGC’s refusal to acknowledge or fix the insolvency amounted to a breach of contract and triggered GGC’s obligation to return claimants’ digital assets. In addition, the claimants allege that all of the transactions constituted unregistered sales of securities and must be rescinded.

The law firm representing the claimants said that GGC’s actions were “unlawful and unfair,” and that the claimants are seeking “full rescission of their transactions, all damages suffered as a result of their transactions, and punitive damages.”

The case will be heard by the AAA’s Financial Industry Regulatory Authority (FINRA), a private corporation that serves as a self-regulatory body for the securities industry. The case is expected to have significant implications for the digital currency industry, as it could potentially set a precedent regarding the legal and regulatory status of digital currency transactions.

The claimants are seeking a resolution that will provide “full rescission of their transactions, all damages suffered as a result of their transactions, and punitive damages,” according to the law firm. The outcome of the case could have significant implications for the digital currency industry, as it could potentially set a precedent regarding the legal and regulatory status of digital currency transactions.

It remains to be seen how the case will unfold and what the final outcome will be, but it is clear that the claimants are seeking to send a strong message that any breach of contract or unregistered sale of securities must not be tolerated. The stakes are high for both sides, and the outcomes of the case could have far-reaching implications for the industry.