Cameron Winklevoss, co-founder of the crypto exchange Gemini, released a open letter to Barry Silbert, founder, and CEO of Digital Currency Group (DCG). The parent company of Grayscale and crypto lender Genesis, Winklevoss, has called its partners on a situation that has put thousands of customers in financial trouble.
Bitcoinist reports that Gemini’s Earn product has ceased operations following the Genesis liquidity crisis. The company is affected by FTX and has been trying to raise capital to continue operations. In the meantime, customer funds are stuck in Genesis and Gemini’s Earn.
Gemini Founders Ask for Quick Resolution
In the document, Winklevoss lists 340,000 Earn users, “real people” who “lent” funds to Genesis. Following Winklevoss’s logic, these people rely on Barry Silbert and the Digital Currency Group for funding. The letter:
These users are not just numbers on a spreadsheet. They are real people. A single mother who loans her son’s education money to you. The father who lent his son’s bar mitzvah money to you. Husband and wife who lend their life savings to you (…). They deserve concrete answers and we are here to get them.
Through Gemini Earn, these people earn money for cryptocurrencies, such as Bitcoin, Ethereum, and others, by participating in high-yield programs. The product was launched in 2015 and became popular as an alternative for crypto investors to get high returns on digital assets.
Six weeks ago, operations were halted because Genesis, the main partner of the program, could not meet the new withdrawal requests of its customers. Since then, the partners have been negotiating in “good faith and collaboratively,” the letter said.
Winklevoss said that Gemini tried to make its clients whole while allowing DCG room to maneuver; the company earned around $1 billion due to Genesis products. However, the negotiations reached a critical point as it became “obvious that you have engaged in poor stall tactics.”
Barry Silbert has allegedly refused to meet face-to-face with Winklevoss despite drafting a proposal for a deal. The letter states:
On December 25, Christmas Day, a new version of this proposal was sent to you. Despite this, you still refuse to enter the room with us to come up with a resolution. In addition, you continue to refuse to agree on a time with important milestones.
Asset Creation Chaos, DCG, And Genesis Commingled Assets?
The CEO of DCG used to be very active on social media platforms. After Genesis ceased operations, they went radio silent and reduced their internet presence. He took to Twitter and responded below to Winklevoss’ open letter:
DCG did not borrow $1.675 billion from Genesis
DCG has never missed interest payments for Genesis and now on all outstanding loans; The next debt maturity is May 2023
DCG sent Genesis and your advisors a proposal on December 29 and have not received a response
— Barry Silbert (@BarrySilbert) January 2, 2023
According to Winklevoss, Silbert has shirked his responsibilities, hiding “behind lawyers, investment bankers,” and others. Thus, the CEO of DCG is allegedly trying to avoid his responsibilities. Winklevoss wrote:
The idea in your head that you can hide quietly in an ivory tower and this will all magically disappear or that this is someone else’s problem is pure fantasy. To be clear, this mess is all self-inflicted.
DCG allegedly owes Genesis more than $1.6 billion. The company used the funds to “fuel greedy share buybacks” and other risky ventures allegedly for Silber’s benefit. Both companies suffer from a disease that plagues many industries: poor asset management.
Winklevoss accused Silbert of combining DCG and Genesis assets. The founders of Gemini gave until January 8, 2023, so that the parties can work together and find a resolution. Otherwise, there is speculation that the exchange will take legal action.