Cryptocurrency lender Genesis Global Capital has initiated legal action against former partner Gemini Trust, aiming to reclaim over $689 million.

The claim alleges that Gemini's preferential transfers of funds from Genesis unfairly disadvantaged other creditors, prompting a plea to the court for rectification.

The Genesis-Gemini dispute emerged post-FTX's collapse, with Genesis filing for bankruptcy in January.

Legal tensions escalated when Gemini sued Digital Currency Group (DCG), Genesis's parent company, in July.

Genesis retaliated in September, suing DCG for the repayment of loans exceeding $600 million.

Gemini's subsequent October lawsuit over 60 million Grayscale Bitcoin Trust shares valued at $1.6 billion intensified the conflict.

Bad Blood

This legal drama has attracted U.S. regulatory attention.

In January, just before Genesis declared bankruptcy, the SEC accused Genesis and Gemini of selling unregistered securities.

Recently, New York Attorney General Letitia James filed a lawsuit against DCG, Genesis, and Gemini, alleging fraud against over 230,000 investors, including 29,000 New Yorkers, amounting to over $1 billion.

The court filing contends that during the market turbulence caused by Terraform Labs and Three Arrows Capital's collapse, Gemini made extraordinary withdrawals before Genesis's bankruptcy filing, contributing to a "run on the bank."

Gemini's demands for loan repayments during the 90-day preference period are deemed "avoidable" and based on the belief that Genesis was insolvent.