The founder of Crypto Exchange Gemini, Cameron Winklevoss, sent another open letter about the Genesis loan agreement. This time, the executive addressed the Board of Directors of Digital Currency Group (DCG), the parent company of Genesis.
In the letter, Winklevoss accused DCG’s current CEO, Barry Silbert, of allegedly conspiring and defrauding Gemini Earn users. Gemini offers the latter, which allows users to earn by lending crypto assets to Genesis.
According to the document, Genesis operated with a negative balance sheet for several years. The crypto lender is 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, Get users, other lenders, and the general public about the solvency and financial health of Genesis. They did this in an attempt to mislead creditors into believing that DCG had absorbed the huge losses incurred by Genesis from the collapse of Three Arrows Capital Ltd. (3AC) (…).
Winklevoss Reveals DCG’s “Toxic Trade”.
According to the document, DCG and Genesis lent more than $2 billion to 3AC before it collapsed. The crypto lender was left with more than $1 billion in debt, which was allegedly “absorbed” by DCG.
The founder of Gemini stated that the Genesis parent company has never taken on any debt from crypto lenders. They allegedly used financial solutions to “pretend” to have fixed the problem. In general, the company announced that it “assumes certain responsibilities of Genesis.”
Behind the scenes, Winklevoss stated that DCG issued promissory notes, maturing in 2032, to “cover” Genesis’ balance sheet hole. This note was used as a “misleading” instrument to keep crypto lenders operating and used to solicit another DCG product, Grayscale Bitcoin Trust.
However, the collapse of FTX caused a liquidity crisis at Genesis. Genesis owes Gemini more than $1 billion, and customers are still waiting for a resolution. The event forced DCG to shut down its operations, locking Gemini Earn Users out of funds.
DCG’s answer to Is Winklevoss Pulling a “Stunt”?
As Bitcoinist reported, Gemini founders sent a letter to Silbert a week ago. On this occasion, Winklevoss gave the DCG a deadline to reach an agreement, January 8. The date arrived, but the parties failed to announce a resolution.
Now, Winklevoss has the following to say about the way forward, the introduction of new DCG management, and the fate of Earn users:
(…) Genesis lenders, including Get users, have been seriously harmed and deserve a resolution to recover their assets. I am confident that with the new Management at DCG, we can all work together to achieve a positive, out-of-court solution that will be a win-win deal for everyone, including DCG shareholders.
The DCG Board of Directors and Silbert responded to Winklevoss. The company called the letter an “unconstructive publicity stunt,” part of a strategy to wash its public image, according to the statement.
The Silbert-led company claimed that Gemini was solely responsible for the marketing and promotion of Gemini Earn. DCG finished:
We maintain all legal remedies in response to this vile, false, and defamatory attack. DCG will continue to engage in productive dialogue with Genesis and its creditors with the aim of finding a solution that works for all parties.