Cameron Winklevoss Accuses Silbert of Hiding Behind Lawyers; Issues Him an Ultimatum

Gemini co-founder wrote an open letter to Barry Silbert on Twitter.

Winklevoss issues Silbert an ultimatum

In an open letter to Barry Silbert, Cameron Winklevoss, the co-founder of Gemini (a cryptocurrency exchange), accused Barry Silbert of avoiding customers ever since Genesis Trading suspended user withdrawals. Winklevoss warned that time was running out and issued Silbert a deadline to commit to working with Earn users and resolve customers’ woes.

Barry Silbert is the founder of Digital Currency Group (DCG), the parent company of Genesis trading. Genesis trading suspended withdrawals amid the FTX chaos.

Winklevoss wrote that people – policemen, mothers, fathers, couples – had entrusted over ‘$900 million of their assets’ to him, and that they deserve answers and that they were there to get them.

“They deserve a resolution for a recovery of the assets they lent to you and an end to this nightmare. To that end, and for the final time, we are asking you to publicly commit to work together by solve this problem by January 8th, 2023.”

On November 16th, Barry Silbert’s Genesis Trading halted withdrawals citing an unprecedented liquidity crunch due to FTX’s crash. Winklevoss slammed Silbert for refusing to “face users” and “hiding away.”

Speaking for ‘over 340,000’ Earn users, Winklevoss accused Silbert of misusing funds obtained from Gemini Earn – a program created by Winklevoss’s Gemini to enable people to earn interest over their crypto holdings – to invest in risky investment avenues:

“To be clear, this mess is entirely of your own making.” Digital Currency Group (DCG) — of which you are the founder and CEO — owes Genesis (its wholly owned subsidiary) ~$1.675 billion.

“You took this money — of schoolteachers — to fuel greedy share buybacks, illiquid venture instruments and Kamikaze Grayscale NAV trades that ballooned the fee generating AUM of your Trust; all at the expense of creditors and all for your personal gain.”

In a damning statement, Winklevoss claimed that “DCG and Genesis are beyond commingled.”

As per Winklevoss, after Genesis halted withdrawals on November 16th, citing the FTX fiasco, Silbert refused to meet with investors despite them agreeing to his condition for a meeting – to draft a proposal before the meeting.

On December 2nd, it was decided by investors that meeting about the withdrawal halt and resolving the issue was the way to go – Silbert agreed. However, he agreed on the condition that there be ‘a proposal on the table.’ And so, a proposal was made to him on December 17th; however, he refused to meet the investors. Then, on December 25th, an ‘an updated version of this proposal’ was made to him. Apparently, he refused the ‘updated version’ as well.

Emphasizing Earn users’ over Silbert’s behavior, Winklevoss charged that he was ‘engaging in bad faith stall tactics.’ He claimed Silbert was refusing ‘to agree to a timeline with key milestones,’ and arraigned him of hiding ‘behind lawyers, investment bankers, and process.

Silbert claims DCG sent proposal that went unanswered

Within a few hours after Winklevoss’s letter, Silbert responded with three counter claims: that DCG did not owe Genesis $1.675 billion; “DCG has never missed an interest payment to Genesis and is current on all loans outstanding; next loan maturity is May 2023;” and that “DCG delivered to Genesis and your advisors a proposal on December 29th and has not received any response”

Winklevoss countered: ‘So how does DCG owe Genesis $1.675 billion if it didn’t borrow the money? Oh right, that promissory note…’

When Genesis Trading and Gemini Earn suspended withdrawals

As mentioned before, Gemini Earn allows users to expose their crypto holdings as loans to institutional investors and earn out of the interest paid by that institutional investor. In this case, Genesis Global Capital (the lending arm of Genesis Trading, an institutional investment firm) had borrowed money from Gemini Earn – $900 million – as per Winklevoss. Genesis further loaned that money to institutional investors.

November was all about the infamous crash of crypto currency exchange FTX. The market and industry shook amid revelations of the mess that was FTX. Genesis Global Capital’s Derivatives trading arm lost $175 million in the FTX crash. However, soon after, DCG infused $140 million into Genesis. Notably, Gemini’s owners claimed that Gemini was not exposed to FTX.

Genesis is a wholly owned subsidiary of DCG. It announced that withdrawals and issuance of new loans were being temporarily suspended because of a liquidity crunch caused by FTX’s bankruptcy — soon after FTX crashed, the trading firm could not handle the sudden surge in the volume of withdrawal requests. The firm went on to clarify that Genesis Global Trading, the broker/dealer that held Genesis’s license, was independently capitalized, operated and separate from other Genesis entities.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing