The CEO of Digital Currency Group, Barry Silbert, has been accused of “bad faith stall tactics” by the co-founder of cryptocurrency exchange Gemini as their respective businesses are at odds over a commercial dispute brought on by FTX’s multibillion-dollar collapse late last year. Silbert said his business delivered a proposal to Genesis and Gemini’s advisors last Thursday
In an open letter published on Twitter, Cameron Winklevoss attacked Silbert and claimed that the cryptocurrency broker Genesis Global Capital and its parent company, DCG, owe the customers of Gemini $900 million. According to the letter, Gemini allegedly waited six weeks without hearing anything about a repayment deal.
Earn Update: An Open Letter to @BarrySilbert pic.twitter.com/kouAviTho4
— Cameron Winklevoss (@cameron) January 2, 2023
Silbert responds
Silbert tweeted that DCG still needed to receive a response since delivering a proposal to Genesis and Gemini’s advisors on December 29, 2022. Additionally, Winklevoss alleged that DCG “owes” Genesis $1.675 billion, which he accused DCG CEO Barry Silbert of exploiting for purposes that benefited other DCG companies rather than paying creditors.
DCG “did not borrow $1.675 billion from Genesis,” Silbert tweeted in response. He said that DCG is current on all existing loans and has always remembered to pay interest to Genesis.
https://twitter.com/BarrySilbert/status/1609926715454771200
DCG does have a promissory note for $1.1 billion from Genesis linked to obligations connected to the failure of Three Arrows Capital. In November, Silbert stated in a letter to shareholders that DCG also owed $575 million to Genesis Global and that this obligation was due in May
Winklevoss and his twin brother Tyler are co-owners of Gemini Trust Co., which halted redemptions on an interest-earning product called Earn in the middle of November, a week after competitor cryptocurrency exchange FTX declared bankruptcy. By lending their digital tokens to Genesis, users of the program had the chance to earn up to 8% interest on their investment.
A looming collapse?
Gemini’s redemption pause followed Genesis’ disclosure that its derivatives company had about $175 million parked on the platform of the now-insolvent FTX. When FTX declared bankruptcy and SBF was later arrested, Genesis froze withdrawals and stopped creating new loans. Since then, Genesis’s creditors have collaborated with restructuring attorneys to avoid going bankrupt. However, according to many crypto community members, Gemini could see a collapse due to the precision of Cameron’s letter.
1/ Curtains are closing on the once iconic DCG, at least as we know it today.
There’s subtlety in @cameron’s letter and new risks.
– FTX clawback
– Misrepresentations
– State AG investigations
– Jan 8th deadlineLet’s dig in. 🧵
— Ram Ahluwalia CFA, Lumida (@ramahluwalia) January 6, 2023
In addition to a lawsuit against the company’s Earn product alleging fraud and breaches of securities law and a multitude of irate Earn users who have been unable to access their accounts, Winklevoss’ letter comes while his company is facing significant financial challenges.
