Crypto Exchange Gemini co-founder, Cameron Winklevoss, sent another open letter regarding the Genesis borrowing agreement. This time, the executive addressed the Digital Currency Group (DCG) Board of Directors, Genesis’ parent company.
In the letter, Winklevoss accused the current DCG CEO, Barry Silbert, of allegedly conspiring and defrauding Gemini Earn users. Gemini offered the latter, which allowed users to obtain a yield by lending its crypto assets to Genesis.
According to the document, Genesis was operating under a negative balance sheet for years. The crypto lender was allegedly affected by the collapse of one of its major partners, Three Arrows Capital (3AC). Winklevoss wrote:
These parties (Silbert and others) conspired to make false statements and misrepresentations to Gemini, Earn users, other lenders, and the public at large about the solvency and financial health of Genesis. 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 Ltd. (3AC) collapse (…).
Winklevoss Unveils DCG’s “Toxic Trade”
According to the document, DCG and Genesis lent over $2 billion to 3AC before its collapse. The crypto lender was left holding over $1 billion in debt, which was allegedly “absorbed” by the DCG.
The Gemini co-founder claims that Genesis’ parent company never took on debt from the crypto lender. They allegedly used a financial solution to “pretend to” have fixed the issues. Publicly, the company announced that it “assumed certain liabilities of Genesis.”
Behind the curtains, Winklevoss claims that the DCG issued a promissory note, to be mature in 2032, to “cover” Genesis’ balance sheet hole. This note was used as a “misleading” instrument to maintain the crypto lender operating and using it to prompt up another DCG product, the Grayscale Bitcoin Trust.
However, the collapse of FTX precipitated a liquidity crunch in Genesis. Genesis owes Gemini over $1 billion, and its customers are still awaiting a resolution. These events forced DCG to shut down its operations, locking Gemini Earn Users from their funds.
DCG Replies, Is Winklevoss Pulling A “Stunt”?
As Bitcoinist reported, the Gemini co-founder sent a letter to Silbert one week ago. On this occasion, Winklevoss gave DCG a deadline to reach an agreement, January 8th. The date came, but the parties failed to announce a resolution.
Now, Winklevoss said the following on the path forward, the introduction of a new DCG management, and the fate of Earn users:
(…) Genesis lenders, including Earn users, have been seriously harmed and deserve a resolution for the recovery of their assets. I am confident that with new management at DCG, we can all work together to achieve a positive, out-of-court solution that will provide a win-win outcome for all, including DCG shareholders.
The DCG Board of Directors and Silbert replied to Winklevoss. The company called the letter an “unconstructive publicity stunt,” part of a strategy to wash his public image, per the statement.
The Silbert-led company claims that Gemini was solely responsible for marketing and promoting Gemini Earn. DCG concluded:
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.