key takeaways
- Digital Currency Group brought old problems into the new year.
- Gemini co-founder Cameron Winklevoss published an open letter criticizing DCG CEO Barry Silbert’s actions regarding the Genesis liquidity crisis.
- Grayscale’s Ethereum Trust is also trading at a record discount of -60%.
Share this article
Barry Silbert’s woes continue as Cameron Winklevoss turns up the heat, Gemini Earn clients file for class action arbitration, and Grayscale’s Ethereum Trust trades at its lowest discount ever.
New year, same problems
Digital Currency Group and its subsidiaries are still suffering from liquidity problems related to FTX.
Yesterday, Gemini co-founder Cameron Winklevoss published an open letter on Twitter in which he accused DCG founder Barry Silbert of “engaging in bad faith stalling tactics” regarding Genesis’ current liquidity problem.
Genesis is a crypto lending company and a subsidiary of Digital Currency Group. the signature redemptions on pause and new loan originations on November 16, citing “unprecedented market turmoil” due to the FTX collapse. As a result, Gemini was forced to halt its Earn program, which relied on Genesis to provide loan services to Gemini customers.
Winklevoss claimed that Silbert had been hiding “behind lawyers, investment bankers and processes” for the past six weeks to avoid coming face to face with Gemini bosses. According to Winklevoss, Genesis owes Gemini customers roughly $900 million, while DCG owes Genesis $1.675 billion. Silbert responded with a tweet claiming that DCG had failed to borrow $1.675 billion from Genesis, and that the company had delivered a relevant proposal on December 29 to both Gemini and Genesis, with no response from Gemini.
According to reports, three Gemini Earn users also filed an application for the class action arbitration against DCG and Genesis, alleging that Genesis is in breach of the Master Agreement between the company and its users by failing to return the digital assets of Gemini Earn customers. A related class action lawsuit has already been archived against Gemini.
Meanwhile, Grayscale’s Ethereum Trust (ETHE) has hit a record discount of -60%, meaning the investment product is trading at 60% less than the value of its underlying assets. Grayscale is another DCG subsidiary; the discount can be attributed to investors’ pessimistic outlook regarding DCG’s solvency, regarding the crypto market in general, and regarding the approval of the Trust as a spot ETF.
Disclaimer: At the time of writing, the author of this article owned BTC, ETH, and various other cryptocurrencies.
