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The co-founder of cryptocurrency exchange Gemini, Cameron Winklevoss, has launched a scathing attack on Barry Silbert, stating that the Digital Currency Group CEO was unfit to run the company.
According to Winklevoss, DCG failed to repay Gemini, leading the latter to be unable to repay its customers.
A Scathing Attack
Cameron Winklevoss has called for the removal of Barry Silbert, the Chief Executive of Digital Currency Group, as tensions between the executives escalate against the backdrop of the FTX collapse. According to Winklevoss, Genesis Global Capital defrauded around 340,000 users, part of Gemini’s Earn Program, because its parent company, Digital Currency Group, failed to repay Gemini, causing it to be unable to pay its own users.
The attack was made in an open letter penned by Winklevoss to the board of Digital Currency Group and came after a January 2nd letter appealing to Silbert himself. The letter to Silbert saw the Gemini co-founder state that Gemini was owed $900 million by Genesis and accused Silbert of “hiding behind lawyers, investment bankers, and processes.” Gemini later notified users that it was terminating its Earn program, effective January 8th.
“There is no path forward as long as Barry Silbert remains CEO of DCG. He has proven himself unfit to run DCG and unwilling and unable to find a resolution with creditors that is both fair and reasonable.”
Unfit To Run Company
Winklevoss stated that Genesis had lent over $2.4 billion to Three Arrows Capital (3AC), which left the former with a $1.2 billion-sized hole when the hedge fund collapsed in 2022. The Gemini co-founder accused Silbert of orchestrating a campaign of lies, trying to show that DCG had given the funds to Genesis by displaying a promissory note as part of its assets. He also accused Michael Moro, Genesis CEO, of being complicit by issuing misleading statements on social media and claimed DCG personnel had tried to cover up the lack of capitalization at Genesis.
“These misrepresentations [...] were a sleight of hand designed to make it appear as if Genesis was solvent and able to meet its obligations to lenders, without DCG actually committing to the financial support necessary to make this true. DCG wanted to have its cake and eat it too.”
Genesis’s troubles began with the collapse of FTX after it was revealed that the company had around $175 million locked up with FTX. As a result, the company had to suspend redemptions and new loans. As a result, Gemini had to announce delays in withdrawals from its Earn program.
DCG Already Under Scrutiny
DCG and its subsidiaries have been under increased scrutiny following the FTX collapse after it was revealed that Genesis had $175 million locked up in a frozen FTX account. Prosecutors are also investigating transfers between DCG and an embattled subsidiary offering crypto lending services and investigating what investors and users were told about these transactions.
DCG Rebuffs Winklevoss
A DCG spokesperson called the new letter from Winklevoss a “desperate publicity stunt.” The spokesperson further added that Winklevoss and Gemini were alone responsible for their Earn program and marketing it to customers. According to the spokesperson, the firm could pursue legal action if needed.
Silbert addressed some of Winklevoss’ claims in a letter to shareholders, stating that Genesis had a trading and lending relationship with Three Arrows Capital and Alameda Research. He further added that DCG had not received any cash, cryptocurrency, or other forms of payment for a promissory note for Genesis’s liabilities.
“DCG currently owes Genesis Capital (i) $447.5M* in USD and (ii) 4,550 BTC (~$78M), which matures in May 2023. DCG borrowed $500M in USD between January and May 2022 at interest rates of 10%-12%.”
In response to the letter, Silbert stated that DCG did not borrow $1.6 billion from Genesis and had not missed any interest payment to Genesis on its outstanding loans.
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