This report was revised on Jan. 10 to incorporate a response from both Digital Currency Group and Barry Silbert.
Cameron Winklevoss, co-founder of the crypto exchange Gemini, wrote an open letter to the board of Digital Currency Group (DCG) that their CEO Barry Silbert was “unfit” to run the organization.
In the Jan. 10 missive, Winklevoss contended that Silbert and Genesis Global Capital, a subsidiary of DCG, had defrauded more than 340,000 users of Gemini’s Earn program.
On Twitter, the Gemini co-founder had previously mentioned that Genesis owed Gemini $900 million and blamed Silbert for concealing “behind lawyers, venture capitalists, and processes.” Subsequently, Gemini declared the end of their Earn program on Jan. 8. Winklevoss explained that Genesis had lent over $2.3 billion to Three Arrows Capital, however, when the hedge fund failed in June 2022, they were left with a deficit of $1.2 billion. He maintained that Silbert, DCG, and Genesis had fabricated a “meticulously designed campaign of lies” starting in July 2022 to make it appear that DCG had supplied the funds to Genesis through the usage of a 10-year promissory note as part of its assets.
Moreover, Winklevoss argued that Genesis CEO Michael Moro had taken part in this duplicity by posting “untrue and misleading” statements on social media in regards to DCG providing money to Genesis.
In addition, he stated that some DCG personnel had tried to conceal the lack of “sufficient capitalization” at Genesis. According to the Gemini co-founder, any accounting discrepancies that DCG and Silbert were involved in could have been overlooked if FTX had not gone under within a few months. He declared that there were “repeated trades” between Three Arrows and the Grayscale Bitcoin Trust in what he termed “effectively swap transactions” for Genesis of Bitcoin for GBTC, which in the end resulted in a loss for Genesis and it was not reported properly on its balance sheets.
A spokesperson for DCG called the letter a “desperate and unhelpful public relations stunt,” claiming that Winklevoss and Gemini were “solely responsible for running Gemini Earn and advertising the program to its customers.”
The firm suggested they could resort to legal action if needed. Silbert responded to some of Winklevoss’ claims in a Jan. 10 letter to shareholders, stating that Genesis had a “trading and lending relationship” with both Three Arrows and Alameda Research.
On top of that, he stated that DCG had not received any “cash, cryptocurrency, or any other form of payment” for the $1.1-billion promissory note given to Genesis’ liabilities. In the latest letter, Winklevoss required the DCG board to remove Silbert in order to provide a resolution for Earn users.
In reaction to the letter, Silbert declared that “DCG did not borrow $1.675 billion from Genesis” and “never missed an interest payment to Genesis and is current on all loans outstanding.” Winklevoss commented that “as long as Barry Silbert remains CEO of DCG, there is no feasible way ahead.”
He asserted that Silbert had shown himself to be “unfit to run DCG” and “unwilling and unable to find a fair and reasonable solution with creditors.” Therefore, Gemini, on behalf of the 340,000 Earn customers, asked the Board to dismiss Silbert as CEO.