The co-founder of crypto exchange Gemini has accused Digital Currency Group CEO Barry Silbert of “bad faith stall tactics” as their respective companies lock horns over a business disagreement precipitated by FTX’s multi-billion-dollar implosion late last year.
Cameron Winklevoss blasted Silbert in an open letter posted to Twitter, alleging crypto broker Genesis Global Capital and its parent company, DCG, owe Gemini’s clients $900 million. The letter alleges Gemini has awaited word on a repayment agreement for six weeks to no avail. DCG is also CoinDesk’s parent company.
Silbert responded, tweeting that DCG delivered to Genesis' and Gemini’s advisers a proposal on Dec. 29, 2022, and has not had any response.
Winklevoss also accused the DCG CEO of using $1.675 billion in money Winklevoss claimed DCG "owes" Genesis and using it for purposes that helped other DCG ventures instead of repaying creditors.
“You took this money – the money of schoolteachers – to fuel greedy share buybacks, illiquid venture investments, and kamikaze Grayscale [net asset value] trades that ballooned the fee-generating [assets under management] of your Trust, all at the expense of creditors and all for your own personal gain.”
Silbert responded, tweeting that DCG “did not borrow $1.675 billion from Genesis." He also said DCG has never missed an interest payment to Genesis and is current on all loans outstanding.
DCG does have a $1.1 billion promissory note related to liabilities from Genesis related to the Three Arrows Capital default. In November Silbert wrote in a note to shareholders that DCG had a roughly $575 million liability to Genesis Global that is due this May.
Gemini Trust Co., which is co-owned by Winklevoss and his twin brother Tyler, paused redemptions on an interest-earning product called Earn in mid-November, a week after rival crypto exchange FTX filed for bankruptcy. The product offered investors opportunities to yield as much as 8% interest on their crypto by lending those digital tokens out to Genesis.
Gemini’s redemption pause came on the heels of Genesis' announcement that its derivatives business had roughly $175 million locked on now-insolvent FTX’s platform. Genesis halted withdrawals and suspended new loan originations when FTX filed for bankruptcy. Since then, creditors to Genesis have been working with restructuring lawyers to prevent insolvency.
Winklevoss’ letter comes as his company faces major financial headwinds, including a lawsuit against the firm’s Earn product alleging fraud and securities law violations, and a mob of angry Earn customers who have been unable to access their accounts.
Neither Winklevoss nor Silbert responded to requests for further comment.
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