Gemini Co-Founder Accuses Digital Currency Group Of Fraud, Demands Barry Silbert Sack

Cameron Winklevoss, the co-founder of cryptocurrency exchange Gemini, has openly accused cryptocurrency lender Genesis and its parent company Digital Currency Group (DCG), of fraudulent behavior.

In an open letter published Tuesday, Cameron Winklevoss alleged that both companies had carefully concealed Genesis’ true financial standing before a recent crisis.

Earn Update: An Open Letter to the Board of @DCGco pic.twitter.com/eakuFjDZR2

— Cameron Winklevoss (@cameron) January 10, 2023

Recall that Gemini utilizes Genesis’ lending books to generate interest for customers of its Earn Product. However, Gemini has since been unable to access over $900 million in client funds after Genesis halted withdrawals in mid-November. Genesis’ financial woes resulted from its failed business engagement with now-collapsed crypto exchange FTX.

Digital Currency Group Allegedly Concealed Genesis Losses

According to Cameron Winklevoss, Genesis Global lost $1.2 billion from extending loans to Three Arrows Capital (3AC) – a multi-billion crypto hedge fund that collapsed because of its overexposure to the Terra (LUNA) ecosystem.

With 3AC unable to fulfill its loan obligations, Genesis’ parent company Digital Currency Group (DCG) stepped in backstop the loss. However, the Gemini co-founder alleges that the DCG move was only a “carefully crafted campaign of lies.”

DCG entered a 10-year promissory note with Genesis at an interest rate of 1%, due in 2023. The move did not inject any funding into Genesis to compensate for the losses. Instead, it was only a “gimmick” that did nothing to improve Genesis’s “immediate liquidity position,” Winklevoss alleges.

The Gemini co-founder further alleges that DCG used Three Arrows Capital to inflate the value of its affiliated Grayscale Bitcoin Trust (GBTC) to generate profits for Digital Currency Group. Despite earning over $1 billion from GBTC management fees, Winklevoss alleges that DCG CEO Barry Silbert has been unwilling to resolve the balance sheet situation at Genesis.

Lenders like Gemini continued lending funds to Genesis while unaware of the company’s financial standing. It is estimated that over 340,000 Gemini’s earned product users now have funds stuck with Genesis.

In his open letter to the Digital Currency Group Board, Cameron Winklevoss requested that they relieve Barry Silbert of his position as CEO. The Gemini co-founder believes both companies can reach an agreement if DCG comes under management.