The Winklevoss twins' crypto exchange Gemini escalated its dispute with Digital Currency Group's (DCG) Genesis Global Trading – its partner on a crypto lending product pitched to smaller investors – by terminating a key aspect of their relationship.
Gemini ended the master loan agreement (MLA) between its customers and Genesis, Gemini told customers of its Gemini Earn in an email on Tuesday. "This officially terminates the Earn Program and requires Genesis to return all assets outstanding in the program," according to Gemini's email. "Existing redemption requests are not impacted and continue to await fulfillment by Genesis."
In a statement, a spokesperson for Genesis said the company does "not agree with everything that Gemini has said" and was "disappointed that Gemini is waging a public media campaign despite ongoing productive private dialogue between the parties." It added: "This is a very complex process that will take some additional time, but we are committed to moving as quickly as possible."
Crypto broker Genesis' lending arm halted customer withdrawals in November in the aftermath of FTX's collapse. That locked up Gemini Earn customers' money. Gemini Earn was launched in February 2021 and marketed as an interest-earning account for cryptocurrency deposits, with Genesis supplying the yield Gemini Earn investors received.
Gemini's termination is effective as of Jan. 8, the deadline the company previously set in a Jan. 2 public letter to CEO Barry Silbert of DCG, the parent company of Genesis (and CoinDesk). The letter also accused Silbert of "engaging in bad faith stall tactics" during negotiations.
The decision to terminate the partnership comes amid other signs the feud between Gemini co-founder Cameron Winklevoss and Barry Silbert is heating up.
"Gemini is also a victim of the Genesis/DCG Group's conduct," the court filing read. "Members of the Genesis/DCG Group misled Defendants about Genesis, its financial condition, and its ability to act as a responsible borrower in the Gemini Earn program."
In the court filing, Gemini also deflected blame from angry customers, saying their complaint "goes after the wrong parties" and that users acknowledged in writing that their assets in the Earn product "faced the risk of total loss."
Additionally, Gemini denied all claims made in the lawsuit because customers had signed an agreement to "arbitrate all claims relating to the Gemini Earn program" and that plaintiffs' claims and causes of action "should not be litigated in any forum unless Genesis is joined."
UPDATE (Jan. 10, 2023, 17:59 UTC): Adds a statement from Genesis.
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