Gemini co-founder accuses DCG’s Silbert of “Bad Faith” while dispute over $900 million in locked funds stagnates

On Jan 2, 2023

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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 for six weeks without hearing anything about a repayment deal. CoinDesk’s parent firm is also DCG.

Earn Update: An Open Letter to @BarrySilbert pic.twitter.com/kouAviTho4
— Cameron Winklevoss (@cameron) January 2, 2023

In response, Silbert tweeted that DCG had not received 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 she also 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 – fo 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 own personal 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 did not borrow $1.675 billion from Genesis
DCG has never missed an interest payment to Genesis and is current on all loans outstanding; next loan maturity is May 2023
DCG delivered to Genesis and your advisors a proposal on December 29th and has not received any response
— Barry Silbert (@BarrySilbert) January 2, 2023

DCG does have a promissory note for $1.1 billion from Genesis linked to obligations related to the failure of Three Arrows Capital, and in November Silbert stated in a letter to shareholders that DCG also owed $575 million to Genesis Global and that this obligation is 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 put a stop to the creation of new loans. Since then, Genesis’s creditors have been collaborating 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 throng of irate Earn users who have been unable to access their accounts, Winklevoss’ letter comes while his company is facing significant financial challenges.

Further inquiries for comment were not answered by Silbert or Winklevoss.

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