- Cameron Winklevoss accused Genesis of recklessly lending to now-bankrupt crypto hedge fund 3AC while also misleading their partners and investors.
- DCG said that its $1.1 billion promissory note to Genesis is due in 2032 and is not callable. Thus, they don’t need to pay this any time immediately.
On Tuesday, January 10, Cameron Winklevoss – the cofounder of crypto exchange Gemini – published an open letter addressing the directors of Digital Currency Group (DCG). Mincing no words, Winklevoss demanded the ouster of CEO Barry Silbert from DCG.
This comes following the recent development of Genimi’s $900 million stuck with DCG subsidiary Genesis Global after they suspended withdrawals last month. Genesis was one of the primary partners of Gemini for the Gemini Earn Product which allowed crypto users to earn 8 percent interest on deposits.
In his statement, Winklevoss made serious allegations of wrongdoing against Silbert adding that there’s “no path forward” with Silbert as the CEO. The Gemini cofounder also mentioned that Silbert has “proven himself unfit” to run the company.
Winklevoss has alleged that Genese, DCG, and Barry Silbert orchestrated a “campaign of lies” through false statements and misrepresentations of their financial health. He also alleged that they together made Earn users and other investors believe everything was fine.
Besides, Winklevoss also slammed crypto lender Genesis for recklessly lending to crypto hedge fund Three Arrows Capital (3AC). He also believes that Genesis and 3AC conducted a “kamikaze” trade where 3AC swapped Bitcoin against shares in the Grayscale Bitcoin Trust (GBTC). In his expansive letter, Cameron Winklevoss wrote:
They did so in an effort to mislead lenders into believing that DCG had absorbed massive losses that Genesis incurred from the Three Arrows Capital (3AC) collapse and induce lenders to continue making loans to Genesis. By lying, they hoped to buy time to dig themselves out of the hole they created.
DCG and Barry Silbert Respond
In hours following the open letter, the Digital Currency Group (DCG) responded by calling it “another desperate and unconstructive publicity stunt” from Cameron Winklevoss. The DCG accused Cameron of deflecting blame from himself and Gemini.
They added that Winklevoss and Gemini are “solely responsible for operating Gemini Earn and marketing the program to its customers”. The DCG Group further added:
We are preserving all legal remedies in response to these malicious, fake, and defamatory attacks. DCG will continue to engage in productive dialogue with Genesis and its creditors with the goal of arriving at a solution that works for all parties.
Furthermore, DCG CEO Barry Silbert also wrote a letter to investors clarifying the matter. Earlier, Gemini executive Cameron Winklevoss had alleged that DCG owes $1.675 billion to Genesis’ lending arm. But in his letter, Silbert clarified that the $1.1 billion promissory note issued by Genesis is due in 2032 and is not callable.
I’ve been reflecting quite a bit about the past year, the state of the industry and where things go from here.
Here is an update to address those reflections, other developments and some speculation about @DCGco (1/10)https://t.co/xEohthubvD
— Barry Silbert (@BarrySilbert) January 10, 2023
It means that DCG won’t need to immediately repay the $1.1 billion in any process of Genesis’s possible bankruptcy reorganization. Another point that he clarified was that DCG’s two loans from Genesis totaling USD 525 million are at Arms’s length. Commenting on DCG’s role in the restructuring of Genesis Capital, Silbert added:
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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