DCG's Barry Silbert Talks About Genesis in Letter to Shareholders
Crypto exchange Gemini co-founder Cameron Winklevoss earlier on Tuesday called for the DCG board to remove Silbert as CEO.
Barry Silbert, the head of crypto conglomerate Digital Currency Group (DCG), gave his shareholders more details about his company's Genesis Capital lending division that was forced to halt customer withdrawals in the aftermath of FTX's November collapse.
Writing in a letter to investors, Silbert (whose firm owns crypto trading firm Genesis, asset manager Grayscale, CoinDesk and other companies) said that "this past year has been the most difficult of my life – both personally and professionally. Bad actors and repeated blow-ups have wreaked havoc on our industry, with ripple effects extending far and wide."
He noted DCG has cut jobs and is winding down its crypto asset manager HQ.
In a Q&A section, Silbert waded into the controversy around Genesis and its customer Gemini, the crypto exchange founded by the Winklevoss twins. Genesis' lending arm halted withdrawals in November, which locked up funds belonging to investors in Gemini's Earn product, leaving Gemini scrambling to figure out how to get money back to its customers.
Gemini raised the temperature in the fight this week, calling for Silbert to step down as CEO of DCG and officially canceling the Gemini Earn program. Gemini has raised questions about the movement of money between Genesis and DCG.
In his letter Tuesday, Silbert said DCG has borrowed from Genesis Capital, but "these loans were always structured on an arm's length basis and were priced at prevailing market interest rates." Silbert said DCG has a $1.1 billion promissory note maturing in 2032 with Genesis Capital, which arose from DCG assuming its subsidiary's bankruptcy claim against crypto hedge fund Three Arrows Capital. DCG, according to the letter, also owes the subsidiary $447.5 million (of actual U.S. dollars, not crypto) borrowed between January and May 2022 at interest rates of 10% to 12%, plus 4,550 bitcoin (BTC), worth about $78 million.
As for DCG's role in Genesis Capital attempting to restructure, Silbert said: "Because of the outstanding loans and the promissory note that DCG owes to Genesis Capital, DCG executives, including those on the Genesis board, have no decision-making authority related to any restructuring of Genesis Capital."
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