By George Ward
The United States Federal Bureau of Investigation (FBI), the Securities and Exchange Commission (SEC), and the New York City Prosecutors have questioned Cameron Winklevoss, the co-founder of crypto firm Gemini Trust Co. According to sources familiar with the situation, the investigation was related to the alleged fraud case involving Barry Silbert, the Digital Currency Group (DCG) founder.
Ongoing Federal Investigations
According to multiple reports, the latest questioning by the FBI is a critical component of an ongoing investigation into the financial operations of DCG (Digital Currency Group) and its now-defunct lending arm, Genesis Global Capital. Moreover, the investigation delves into minute details, intending to pinpoint any irregularities that may have occurred within these entities.
Despite the gravity of the allegations and the involvement of federal regulatory agencies, Silbert is yet to face formal charges of wrongdoing. The unfolding saga has cast a shadow over the once-prominent DCG and its subsidiary, Genesis Global Capital, whose bankruptcy case has raised serious concerns about its financial management and other similar entities.
In addition, every web of transactions, investments, and partnerships is scrutinized by investigators, looking for any potential blunders or breaches of financial ethics that may have contributed to the firm’s downfall. It is worth noting that Genesis Global’s primary creditor, Gemini, is embroiled in a legal battle with DCG and its CEO, Barry Silbert.
A DCG spokesperson stated that Silbert vehemently denies any allegations of fraudulent behavior by the prosecutors. According to the statement, the company has consistently followed legal procedures and upheld the highest ethical standards in all its operations.
In addition, the spokesperson assured that the firm is fully committed to cooperating with regulators and stands ready to assist as needed.
Matters Arising
Meanwhile, the roots of this controversial dispute can be traced back to a 2021 partnership between Gemini and Genesis. The two firms collaborated to launch an innovative “earn program,” which allowed Gemini users to lend their crypto assets to Genesis in exchange for guaranteed interest returns.
This venture promised to be a win-win situation for both parties involved. However, the deal shifted dramatically in November 2022 when Genesis abruptly ceased payouts, citing “unprecedented market turmoil.”
The unexpected events sent shockwaves through the crypto community, leaving many investors worried about whether they would recoup their investments. Meanwhile, the abrupt payment halt was the first in a chain of events that would climax in January when Genesis filed for Chapter 11 bankruptcy.
This filing was a regrettable turning point for the once-promising crypto lending platform, and it sent shockwaves throughout the industry. The firm’s decision to seek Chapter 11 bankruptcy protection highlights the magnitude of Genesis’ financial challenges.
In a surprise move, Gemini launched a lawsuit against DCG and Silbert over the inability of DCG to honor the terms of their collaboration. According to the legal filing, Gemini claimed that Genesis engaged in deceptive lending practices, and DCG and Silbert intentionally provided inaccurate and incomplete information to Gemini.
Amid the controversies, one of the Winklevoss twins posted on his Twitter handle on July 7, claiming that Silbert is fully aware of Genesis’ significant financial difficulties, particularly after the collapse of Three Arrows Capital in June 2022.