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Crypto exchange Gemini Trust Co co-founder Cameron Winklevoss publicly accuses fellow digital asset executive Barry Silbert of “bad faith stalling tactics” involving nearly $1 billion worth of Gemini client assets that have been frozen for over a month.
In an open letter sent to TwitterAhemWinklevoss, 41, alleged that Silbert, CEO of Digital Currency Group, has delayed for more than a month in returning money he owes to users of the Gemini’s Earn program.
Under the Earn program, investors lent Gemini crypto assets in exchange for interest payments of up to eight percent. Gemini, in turn, lent those assets to Genesis Global Capital, one of the companies owned by Digital Currency Group.
Cameron Winklevoss, 41, has publicly asked crypto executive Barry Silbert to return his client’s funds, which were likely lost when FTX imploded in November.
Winklevoss, who runs Gemini Trust Co., a cryptocurrency exchange, has clients who are owed $900 million that the firm lent to Genesis, a DCG subsidiary.
Genesis halted withdrawals in early November following the collapse of cryptocurrency trading firm FTX. ReportedlyGenesis had significant loans outstanding to FTX’s sister firm, Alameda Research, and halted all transactions citing its implosion.
That hiatus has caused a liquidity crisis for Gemini that the Winklevoss twins now appear to be litigating via the real-time Twitter war.
Tyler and Cameron Winklevoss
In the letter he released Monday, Winklevoss accused Silbert of repeatedly dodging Gemini executives over the past month and a half and refusing to set up a payment plan for the $900 million Gemini loaned to Genesis.
Gemini and Tyler and Cameron Winklevoss were sued last week by investors for fraud and for allegedly selling interest-bearing accounts without registering them as securities.
Winklevoss accused Digital Currency Group of owing $1.675 billion to Genesis, money that could be used to pay off Gemini, as well as other Genesis lenders.
However, in an online response, Silbert said that DCG did not borrow the money from Genesis and has made all outstanding loan payments to Genesis.
In addition, he stated that “DCG delivered a proposal to Génesis and its advisors on December 29 and has not received any response.”
Barry Silbert, founder and CEO of Digital Currency Group, the entity that owns Genesis, says that DCG did not borrow $1,675 from Genesis.
After the FTX implosion in November, Gemini Trust Co. halted transactions for its Earn crypto lending branch that had loaned Genesis more than $900 million.
Cameron Winklevoss wrote an open letter to Barry Silbert about the $900 million his Gemini clients are owed.
Winklevoss replied: ‘There you go again. Stop trying to pretend that you and DCG are innocent bystanders and had nothing to do with creating this mess.
It is completely false.
‘So how does DCG owe Genesis $1.675 billion if they didn’t borrow the money? Oh right, that IOU…’ Winkelvoss wrote, implying that Genesis lent the funds to DCG.
Genesis previously told clients that due to its exposure to FTX it could take ‘weeks’ to find a potential way forward and that bankruptcy is a distinct possibility.
Winklevoss, facing lawsuit and mounting pressure from his own angry clients, said he had offered Silbert multiple proposals for a way forward, including one recently on Christmas Day.
He claimed that the $1.675 billion “is money that Genesis owes to ‘Gemini customers’ and other creditors.”
“It is not lost on us that you have been working desperately to try and DCG firewall the problems you created in Genesis,” Winklevoss wrote.
“You should get rid of this fiction because we all know what you know: that DCG and Genesis are more than mixed.”
The relationship between DCG and Genesis bears similarities to that between decimated crypto trading firm FTX and its sister trading arm Alameda Research.
The money in question, Winklevoss wrote, was used for failing DCG ventures, as well as “greedy stock buybacks” and “illiquid venture investments.”
The Gemini/Genesis breakup is the most recent result of the FTX/Alameda Research collapse, and the relationship between Genesis and DCG somewhat reflects the troubled mix of FTX and Alameda.
FTX founder and disgraced former CEO Sam Bankman-Fried will appear in Manhattan court on Tuesday to plead guilty to fraud charges by US prosecutors. He has been informed that he will plead not guilty.