Cameron Winklevoss, a co-founder at crypto exchange Gemini, released an open letter for Barry Silbert, founder, and CEO of Digital Currency Group (DCG). The parent company of Grayscale and crypto lender Genesis, Winklevoss, called out his partner on the situation that is putting thousands of customers in financial distress.
Bitcoinist reported that Gemini’s Earn product halted operations following Genesis’ liquidity crunch. The company was impacted by FTX and had been attempting to raise capital to resume its operations. In the meantime, customers’ funds are stuck in both Genesis and Gemini’s Earn.
Gemini Founder Asks For Speedy Resolution
In the document, Winklevoss puts a face on the 340,000 Earn users, the “real people” that “lent” their funds to Genesis. Following Winklevoss’s logic, these people trust their funds to Barry Silbert and the Digital Currency Group. The letter reads:
These users aren’t just numbers on a spreadsheet. They are real people. A single mom who lent her son’s education money to you. A father who lent his son’s bar mitzvah money to you. A husband and wife who lent their life savings to you (…). They deserve concrete answers and we are here to get them.
Via Gemini Earn, these people received a profit for their cryptocurrencies, such as Bitcoin, Ethereum, and others, by participating in their high-yield program. The product was launched in 2015 and became popular as an alternative for crypto investors to obtain a high yield on their digital assets.
Six weeks ago, operations were halted as Genesis, the program’s leading partner, could not meet customers’ new withdrawal requests. Since then, the partners have been negotiating in a “good faith and collaborative manner,” the letter claims.
Winklevoss says that Gemini attempted to make its clients whole while allowing DCG room for maneuver; the company owns around $1 billion due to Genesis products. However, the negotiations reached a critical point as it became “clear that you have been engaging in bad faith stall tactics.”
Barry Silbert has been allegedly unwilling to meet face-to-face with Winklevoss despite drafting a proposal for a deal. The letter claims:
On December 25th, Christmas Day, an updated version of this proposal was delivered to you. Despite this, you continue to refuse to get into a room with us to hash out a resolution. In addition, you continue to refuse to agree to a time with key milestones.
A Mess Of Your Own Making, DCG, And Genesis Commingled Assets?
The DCG CEO used to be very active across social media platforms. After Genesis halted operations, he went into radio silence and reduced his internet presence. He took to Twitter and replied the following to Winklevoss’ open letter:
DCG did not borrow $1.675 billion from Genesis
DCG has never missed an interest payment to Genesis and is current on all loans outstanding; next loan maturity is May 2023
DCG delivered to Genesis and your advisors a proposal on December 29th and has not received any response
— Barry Silbert (@BarrySilbert) January 2, 2023
According to Winklevoss, Silbert has avoided his responsibility, hiding “behind lawyers, investment bankers,” and others. Thus, the DCG CEO is allegedly trying to avoid his responsibility. Winklevoss wrote:
The idea in your head that you can quietly hide in your ivory tower and that this will all just magically go away or that this is someone else’s problem is pure fantasy. To be clear, this mess is entirely of your own making.
DCG allegedly owes Genesis over $1.6 billion. The company used these funds to “fuel greedy share buybacks” and other risky ventures allegedly for Silber’s gain. The two companies suffered from an illness that took down many in the industry: poor asset management.
Winklevoss accused Silbert of commingling DCG and Genesis’ assets. The Gemini founder gave until January 8th, 2023, for the parties to commit and find a resolution. Otherwise, there is speculation that the exchange will take legal action.