By Michael Scott
Gemini’s Cameron Winklevoss conveyed an open letter criticizing the Digital Currency Group for stalling refunds of funds it owes customers.
DCG and Genesis Engulfed in Liquidity Crisis
The letter portrays the liquidity crisis engulfing crypto broker Genesis – Digital Currency Group (DCG) lending arm. The letter recalls that Genesis suspended customer withdrawals shortly after the FTX downfall in November. Winklevoss reveals that by then, Genesis owed the users of Gemini’s Earn Product $900 million. He laments that DCG, led by its chief executive Barry Silbert of evasive tactics.
The letter dated January 2 by Cameron Winklevoss regretted that Silbert’s DCG was evasive and lacking in commitment to resolve the trapped funds’ situation. The Gemini co-founder observed that DCG and Genesis repeatedly opposed the consensual resolution. He noted that Silbert slow-walked the refund process.
DCG Evasive Tactics Criticized
Winklevoss acknowledged that while restructuring may occasionally become slow and attract startup costs, he noted that Silbert engaged in bad-faith tactics. The co-founder’s letter accused Silbert of failing to embrace talks proposed by Gemini leadership. Instead, DCG turned down the timeline proposed on various milestones.
Winklevoss’ letter regrets DCG’s inactivity despite six weeks of lapsing as unacceptable and unconscionable. He altered Silbert that gradually DCG will not conceal the problem for longer. The letter referred to Silbert’s disclosure to investors that DCG is facing $1.675 billion claims from Genesis. Besides the $575M loan due in May 2023, DCG has a $1,1 billion promissory note linked to the Three Arrows Capita it should honour in June.
DCG Counter Arguments
Silbert refuted Winklevoss’ letter that it borrowed $1.675 billion from Genesis. The chief executive confirmed proposing a detailed solution to Gemini and Genesis on December 29 that both parties are yet to respond. He reassured me that DCG honours its interest payment schedules, including the outstanding loan in May 2023.
Winklevoss challenged Silbert to publicly devote himself to addressing the current crisis by January 8. However, the letter did not outline subsequent actions it may initiate against Silbert when he fails to honour the deadline. The letter identifies Genesis as the primary lending partner of Gemini. It reads that Genesis’ decision to suspend loan withdrawals prompted Gemini to halt withdrawals for the Earn users. Continued stall to refund the users’ funds prompted Gemini customers to file a class action petitioning the recognition of interest-bearing Earn as security in December.
Winklevoss’ letter disputes Silbert camouflaged attempts to resolve the crisis. It disputes Silbert’s letter in November that dismissed DCG faced imminent threats following the industry-wide shockwaves from FTX’s downfall.
Winklevoss warns that DCG is concealing the liquidity crisis as indicated by the Dutch-based Bitvavo crypto exchange and the creditor committee tasked with resolving Gemini’s issues.
Editorial credit: Piotr Swat / Shutterstock.com