Gemini takes DCG and Barry Silbert to court
Gemini, the cryptocurrency exchange run by the Winklevoss twins, has filed a lawsuit in a New York court against Digital Currency Group (DCG) and its boss Barry Silbert over the Genesis and Earn program sagas.
Alleging fraud against creditors, Gemini claimed in a filing today that DCG and Silbert were involved in a scheme whereby large amounts of crypto and fiat money were lent to Genesis, a subsidiary of DCG.
The filing stated that Gemini seeks to recover funds incurred as a result of Silbert’s false representations and omissions, as well as their role in facilitating Genesis’ fraud against their Earn program. Gemini also intends to pursue legal action in Genesis’ bankruptcy case.
The lending unit of Gemini suspended redemptions and new loans in November due to the collapse of FTX crypto exchange. At the time, Gemini had reportedly experienced a $563 million rush in customer outflows in a single day, which was the largest in its history.
The Earn accounts were frozen with more than $900 million in customer money after its main lending partner, Genesis Global Capital, enacted a similar freeze before going bankrupt. The program allowed Gemini users to loan crypto to Genesis with the promise of repayment with interest.
The indisputable fact is that DCG and Barry were directly involved in misleading creditors as to the financial… https://t.co/PcSWSbtUdi
— Tyler Winklevoss (@tyler) July 7, 2023
The Winklevoss twins’ exchange stressed that “The return of your assets remains our highest priority and we continue to operate with the utmost urgency.”
In a letter shared on Twitter, Gemini cofounder Cameron Winklevoss brushed off Digital Currency Group CEO Barry Silbert, accusing him of misrepresentation and accounting fraud.
“Barry, DCG, and Genesis all conspired to create false financial reports to hide the truth from Gemini and creditors. This fraud goes to the very top. Barry Silbert and other DCG executives were directly involved in these lies and they lied again and again to conceal the truth from Gemini and other creditors,” said Winklevoss.
DCG, the parent company of Genesis Global Trading, crypto app Luno, and media company Coindesk, hit back at the accusations. The firm called Winklevoss’ open letters “another desperate and unconstructive publicity stunt” designed to “deflect blame from himself and Gemini, who are solely responsible for operating Gemini Earn.”
DCG added that it would “preserve all legal remedies in response to the malicious, fake, and defamatory attacks.” Winklevoss also claims that DCG owes Genesis $1.675 billion, but the company’s CEO disputes that this figure is correct.
The legal action comes barely two days after Cameron Winklevoss made a new proposal to resolve the ongoing debt restructuring negotiations for the bankrupt crypto lender, Genesis.
Describing it as a “best and final offer,” Winklevoss presented a detailed plan worth $1.46 billion. The bid includes forbearance payments as well as new loans that are denominated in USD, Bitcoin (BTC), and Ethereum (ETH). This substantial amount will be paid out in multiple installments, with each tranche scheduled to be settled at different intervals. Additionally, a forbearance payment is included in the deal, which is set to be paid on July 21.