As a result of FTX’s multibillion-dollar crash at the end of last year, the co-founder of crypto exchange Gemini has accused Digital Currency Group CEO Barry Silbert of “bad faith stall tactics.”
In an open letter published on Twitter, Cameron Winklevoss criticised Silbert, claiming that Genesis Global Capital and its parent company, DCG, owe $900 million to Gemini’s customers. The letter claims that Gemini has been waiting in vain for the past six weeks to hear back about a repayment plan. CoinDesk is owned and operated by DCG.
Silbert tweeted that DCG had sent a proposal to Genesis and Gemini’s advisors on December 29, 2022, but had yet to hear back.
Moreover, Winklevoss claimed that DCG “owes” Genesis $1.675 billion, which Winklevoss argues Silbert instead spent on DCG’s share buybacks, venture investments, and Grayscale NAV trades rather than repaying creditors.
After receiving criticism for borrowing from Genesis, Silbert tweeted that DCG did not borrow $1.675 billion. He emphasised that DCG has always been current on all of its loans to Genesis and has never missed an interest payment.
DCG has a $575 million liability to Genesis Global that is due in May and a $1.1 billion promissory note linked to liabilities from Genesis connected to the Three Arrows Capital default. Both of these were disclosed by Silbert in a message to shareholders in November.
Winklevoss and his twin brother Tyler run the crypto exchange Gemini Trust Co. In the middle of November, a week after FTX filed for bankruptcy, Gemini halted redemptions on an interest-earning product Earn. Investors thus can earn up to 8% annually by lending their digital tokens to Genesis through this service.
After Genesis revealed that its derivatives company had about $175 million locked on the platform of now-insolvent FTX, Gemini put a hold on redemptions. As soon as FTX filed for bankruptcy, Genesis stopped processing withdrawals and making new loans. Since then, Genesis’s creditors have been coordinating with lawyers specialising in corporate reorganisation to prevent insolvency.
With a lawsuit against the company’s Earn product alleging fraud and securities law violations and a swarm of furious customers unable to access their accounts, Winklevoss’ letter arrives at a time when the company confronts significant financial headwinds.