DCG Files Motion to Dismiss Gemini's Lawsuit
Defendants, Digital Currency Group, Inc. (DCG) and its founder, Silbert, have filed a Motion to Dismiss the complaint filed by Gemini Trust Company, LLC (Gemini) regarding the Gemini Earn program and the bankruptcy of Genesis Global Capital, LLC (Genesis).
In its complaint, Gemini alleges that the Defendants were involved in fraudulent misrepresentations relating to the Gemini Earn program, where Gemini's customers could lend their digital assets to Genesis in exchange for interest. Gemini accuses the Defendants of orchestrating a culture of lies and deceit and targets them in a public Twitter campaign. Genesis had declared bankruptcy on January 19, 2023, leaving Gemini with dissatisfied customers and leading them to deflect blame towards the Defendants. Checkout Episode 151 of LexLine for the TLDR
The motion to dismiss emphasizes several key points:
Lack of Involvement by Defendants: The Defendants assert that they had virtually no connection to the Gemini Earn program. They had no role in its inception, promotion, or ongoing operation. The Master Loan Agreement (MLA) executed between the customer, Genesis, and Gemini expressly excluded Genesis's parents or affiliates (including DCG) from any liability.
No Fraudulent Representation by Defendants: Defendants argue that Gemini only identifies one single representation made by Silbert to Cameron Winklevoss during a lunch meeting. However, they contend that Gemini does not explain why this representation was fraudulent.
Failure to Allege Liability: The motion criticizes Gemini's attempts to hold the Defendants responsible for Genesis's alleged misrepresentations. Defendants argue that parent companies are not liable for the conduct of their subsidiaries. Defendant’s argue Gemini's theory of liability for not correcting Genesis's alleged misstatements should therefore be dismissed.
Inadequate Allegations of Fraud Elements: The motion asserts that Gemini fails to provide anything beyond bare, conclusory assertions for elements of fraud, such as knowledge, scienter (intent to deceive), reasonable reliance, and causation between Genesis's representations and Gemini's alleged injuries.
Deficient Conspiracy Claim: Defendant’s also reject Gemini's alternative argument that they aided and abetted in Genesis's alleged fraud as lacking well-pled allegations of actual knowledge, substantial assistance, or any specific claims in Genesis's bankruptcy proceeding.
Minimal Contacts Between Gemini and Defendants: Defendant’s argue that there were minimal interaction between the parties, citing only an October 2022 lunch meeting between Silbert and Cameron Winklevoss. There, they discussed the Gemini Earn program and future collaboration, but no fraudulent representations were detailed.
The principal and pervasive problem with Gemini’s inflammatory and factually baseless allegations is that they have very little to do with Defendants. Taken down to its actual substance, the Complaint identifies just one allegedly false representation by Defendants to Gemini— Silbert’s statements at the October 2022 lunch with Winklevoss. And as to those statements, Gemini does not actually allege that anything Silbert said was actionably false. Instead, it just repeats its claim that Genesis was insolvent, pre-supposes that DGG knew and omitted that fact, and avers that it was incumbent upon Defendants to apprise Gemini accordingly. It was not. Motion to Dismiss at page 8.