Gemini co-founder Cameron Winklevoss has published a lengthy letter alleging that Genesis and its parent company, Digital Currency Group (DCG), defrauded Gemini and more than 340,000 Gemini Earn users. The letter also asserts substantial fraud claims against Barry Silbert and other key personnel of the companies.
The letter alleges that after Genesis Global Capital LLC, the $2.8 billion crypto lending arm of Genesis Trading, made losses of at least $1.2 billion in the wake of cryptocurrency hedge fund Three Arrows Capital. to collapseInstead of taking steps to restructure and protect users, the fund tried to defraud others into thinking that $1.2 billion of working capital had been injected into the company.
Instead of doing this, however, the company allegedly marked a 10-year note as a current asset, which typically “refers to cash, cash equivalents, or other assets that can be exchanged for cash within one year,” according to the letter. . However, Winklevoss writes that, “A note with a principal payment due in 10 years falls outside the definition of a ‘current asset’ per country mile.”
Winklevoss also describes how Genesis was allegedly lending to Three Arrows Capital without regard to the risk of these loans, as the crypto hedge fund was apparently redirecting investment to Grayscale Investments’ GBTC, limiting the Trust’s escalating discount. This risk was then passed on to Gemini Earn users.
The letter claims that greed is ultimately what has driven these investment decisions and, apparently, the loss of Gemini Earn user funds. The letter concludes with a paragraph that reads: “There is no way forward as long as Barry Sibert remains CEO of DCG. He has shown that he is unfit to run DCG and that he is unwilling and unable to find a resolution with creditors that is both fair and reasonable. As a result, Gemini, acting on behalf of 340,000 revenue users, requests that the Board remove Barry Silbert as CEO effective immediately and install a new CEO, who will correct mistakes that occurred under Barry’s watch.”
While bitcoin held in escrows can be frozen and stolen, it’s worth noting that bitcoin properly self-guarded in cold storage cannot be, as alleged in this letter. Gemini Earn users introduced third-party risk and unnecessary trust when they kept their funds on that platform, which then shamelessly lent those entrusted funds. Bitcoin users should clarify to those who do not know the differences between these platforms and their risks and the proper and proper storage of Bitcoin.
In response to the letter, DCG’s Twitter account posted a official statementembedded below.
