In a recent revelation, sources familiar with the matter disclosed that crypto exchange Gemini Trust Co. withdrew a substantial amount, approximately $282 million in cryptocurrency, from Genesis Global Holdco LLC a few months before Genesis froze deposits and eventually filed for bankruptcy.

This move, known to only a few, sheds light on the intricate dynamics within the crypto space.

Genesis and Gemini jointly offered customers the “Earn” program, enabling them to generate yields on their crypto tokens by lending them through Genesis. The funds withdrawn from Genesis were allocated towards building a reserve intended to facilitate immediate redemptions for Gemini Earn customers.

However, it is emphasized that none of this substantial amount went directly to Gemini’s founders, the Winklevoss twins.

The tumultuous period in the crypto market, exacerbated by the collapse of FTX, significantly impacted Genesis, forcing it to freeze customer withdrawals and eventually file for Chapter 11 bankruptcy protection in January. In the aftermath, Gemini filed a claim in the bankruptcy court seeking $1.1 billion on behalf of Earn users.

A series of complex settlement negotiations was followed between Gemini, Genesis, and their parent company, Digital Currency Group (DCG), marked by public disputes and legal action. A tentative agreement in February failed to materialize, leading to further conflicts and Gemini eventually suing DCG for fraud in July.

In the subsequent lawsuit, Gemini alleged that it had sought to terminate Earn in mid-October of 2022 and claimed that a face-to-face meeting with DCG’s founder Barry Silbert took place, where concerns about insolvency were discussed. A DCG spokesperson contested the lawsuit, dismissing it as a “publicity stunt.”

Further complicating the situation, Genesis sued its parent company, DCG, in September for over $620 million in unpaid loans, adding to the already tangled web of legal and financial issues.

Meanwhile, Genesis and Gemini faced charges by the U.S. Securities and Exchange Commission (SEC) in January, accused of representing an unregistered offer and sale of securities.

The drama continues, with federal prosecutors in Brooklyn scrutinizing transfers between DCG and Genesis. This unfolding saga underscores the complexities and challenges inherent in the crypto landscape, illuminating the need for regulatory clarity and transparency within the sector.