Gemini Co-Founder Accuses DCG’s Silbert of “Bad Faith”: 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.
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. CoinDesk’s parent firm is also DCG.
In response, Silbert tweeted that DCG had not received a reply 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 she accused DCG CEO Barry Silbert of exploiting for purposes that benefited other DCG companies rather than paying creditors.
“You took this money – the money of schoolteachers – for fuel greedy share buybacks, illiquid venture investments, and kamikaze Grayscale NAV trades that ballooned the fee-generating AUM of your Trust, all at the expense of creditors and all for your gain.”
DCG “did not borrow $1.675 billion from Genesis,” Silbert tweeted in response. He added that DCG is current on all existing loans and has never forgotten to pay interest to Genesis.
DCG does have a promissory note for $1.1 billion from Genesis linked to obligations related 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.
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, Genesis froze withdrawals and stopped creating new loans. Since then, Genesis’s creditors have collaborated with restructuring attorneys to avoid going bankrupt.
In addition to a lawsuit against the company’s Earn product alleging fraud and violations of securities law and a multitude of angry Earn users who have been unable to access their accounts, Winklevoss’ letter comes while his company is facing significant financial challenges.