Geminis Cameron Winklevoss slams crypto chief Barry Silbert for frozen funds

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(Bloomberg) – The fallout from the collapse of the Sam Bankman-Frieds crypto empire has become more complicated, with digital asset entrepreneur Cameron Winklevoss accusing fellow businessman Barry Silbert of bad faith stall tactics and mix of funds within his conglomerate which Winklevoss says has left $900 million in client assets unnecessarily in limbo since the FTX collapse.

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Gemini Trust Co., founded by Winklevoss and his twin brother, suspended redemptions on a loan product called Earn, which offered investors the chance to earn up to 8% interest on their digital coins. He did this by lending them to Genesis Global Capital, one of the companies owned by Silberts Digital Currency Group.

Earn’s shutdown came in November after Genesis suspended both buybacks and new lending in its lending unit due to its exposure to FTX. Genesis has told clients it could take weeks to find a way forward and bankruptcy could be a possibility.

Winklevoss, facing pressure from his own angry customers locked out of their Gemini accounts and a lawsuit alleging fraud, said in an open letter on Monday that he had provided Silbert with several proposals to address the issue, including as recently than December 25. He said Silbert, this mess is all your doing, citing some $1.675 billion owed to Genesis by DCG, which he used for other business purposes within the Silberts conglomerate. This is money that Genesis owes Earn users and other creditors.

Read more:Gemini and the Winklevoss twins sued over earned account fraud

We don’t lose sight that you worked desperately to try to shield DCG from the problems you created at Genesis, Winklevoss wrote. You should skip this fiction because we all know what you know DCG and Genesis are beyond the mix.

The story continues

Read more: Genesis balance sheet reveals network of loans across Silbert Empire

Silbert in a tweeted response refuted multiple accusations in Wilkevoss’ letter, saying DCG did not borrow $1.675 billion from Genesis and has never missed an interest payment to Genesis and is current on all loans. ongoing, without providing further details. Silbert also claimed that DCG delivered a proposal to resolve the dispute to advisors for Genesis and Winklevoss on December 29, but received no response.

For his part, Winklevoss asked Silbert to publicly commit to working together to resolve the issue, which he says affects more than 340,000 Earn customers, by Jan. 8. He did not say what would happen if no deal was reached by then.

The dispute is the latest example of how the recent crypto crises are fraying long-standing ties between the highest levels of the crypto industry, turning a world that was going to rock it all into one centered on every business for itself. It also highlights the network of interconnections between the largest digital asset companies and their subsidiaries.

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Winklevoss claims the $1.675 billion DCG borrowed from Genesis was used to fuel greedy stock buybacks, illiquid venture capital investments and kamikaze Grayscale NAV deals, referring to another of Silberts’ businesses, Grayscale. Investments, whose largest vehicle is the Grayscale Bitcoin Trust. It happened, he said, all at the expense of creditors and all for your own personal gain.

In statements and tweets, DCG has tried to emphasize that it is separate from Genesis and isolated from its issues. After Genesis suspended buyouts, DCG said in a tweet that this temporary action had no impact on the business operations of DCG and our other wholly owned subsidiaries.

Silbert, in a letter to shareholders in November, said the intercompany loans were made in the normal course of business. He noted that DCG is $575 million in debt to Genesis. In the letter, he also described a $1.1 billion promissory note, due June 2032, which he said came as the parent company stepped in to take on Genesis’ liabilities related to the collapse. of digital asset hedge fund Three Arrows Capital.

Winklevoss’ aggressive stance comes as Gemini and its founders face a lawsuit from investors who accuse the company of fraud, claiming the Earn product was actually an interest-bearing account that he did not register as a security.

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(Adds info on DCG’s relationship with Genesis, plus Winklevoss’s letter.)

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