Gemini Earn Users File Class Arbitration Case Against Genesis Global Capital

• Three users of Gemini Earn have filed a class arbitration case against Genesis Global Capital, Digital Currency Group (DCG), and Genesis Global Trading, with the American Arbitration Association on Dec. 30
• The claimants allege that Genesis breached its agreement with Gemini Earn users and engaged in the unregistered sale of securities
• Class arbitration is a dispute resolution process where a neutral third-party arbitrator resolves the disputes between parties

On December 30th, three users of Gemini Earn filed a class arbitration case against Genesis Global Capital, Digital Currency Group (DCG), and Genesis Global Trading, with the American Arbitration Association. The claimants allege that Genesis breached its agreement with Gemini Earn users and engaged in the unregistered sale of securities.

Gemini, a crypto exchange owned by the Winklevoss twins, offered an ‚Earn‘ program where user assets were lent out to Genesis Global Capital, allowing users to earn interest. On November 16th, five days following the collapse of FTX and Alameda Research, Gemini announced that Genesis had halted withdrawals, leaving users unable to access their funds.

The claimants in the class arbitration want Genesis to return their digital assets as per the Master Digital Asset Loan Agreements made between the two parties. The arbitration case alleges that Genesis breached its Master Agreement when it became insolvent and concealed the fact from its lenders, including Gemini Earn users. Furthermore, the claimants allege that Genesis succeeded in concealing its insolvency partly by “orchestrating a scheme to transfer funds to other related entities.”

Class arbitration is a dispute resolution process where a neutral third-party arbitrator resolves the disputes between parties. While class arbitration is less formal, the decision of the arbitrator is binding and cannot be appealed, unlike class-action lawsuits. In the case of the Gemini Earn users and Genesis, the arbitrator will decide the fate of the $900 million in assets that Genesis owes to the claimants, and will determine whether or not the claimants are due any additional damages.

The class arbitration provides a unique alternative to class-action lawsuits for users who have been wronged by Genesis Global Capital. While the outcome of the arbitration is yet to be determined, it is likely that the decision of the arbitrator will have far-reaching implications for the parties involved, and could set a precedent for future disputes between crypto exchanges and their users.