Home / Gemini Seeking Billions Owned by Genesis: Winklevoss Calls Out Barry Silbert
5 min read

Gemini Seeking Billions Owned by Genesis: Winklevoss Calls Out Barry Silbert

Published July 4, 2023 10:29 AM
Teuta Franjkovic
Published July 4, 2023 10:29 AM
Key Takeaways
  • With the $1.4B sale, Cameron Winklevoss wrote a letter to DCG CEO Barry Silbert accusing him of wasting money and playing games
  • In exchange for Genesis’s bankruptcy estate receiving $100 million, DCG will absorb payouts totaling more than $300 million
  • DCG is having trouble because it hasn’t repaid a $630 million debt and is under investigation by American authorities

Cameron Winklevoss, a co-founder of Gemini, has offered a $1.4 billion settlement to end his bitter dispute with the Digital Currency Group CEO Barry Silbert. On July 4, Winklevoss tweeted about the offer and referred to it as the “best and final offer.”

$1.4B Winklevoss Deal Comes in Open Letter

In the July 4 “Open Letter to Barry Silbert ,” Winklevoss claimed that the DCG organization had participated in “fraudulent behavior” through a “culture of lies and deceit” at the expense of Gemini’s 232,000 Earn users.

“I write to inform you that your games are over. In addition to dragging out a resolution, they have ballooned professional fees to over $100 million, all of which have gone to lawyers and advisors at the expense of creditors and Earn users,” wrote Winklevoss.

Regarding the nature of the incident, the co-founder of Gemini was direct and said that it takes a certain kind of individual to owe $3.3 billion to hundreds of thousands of people and think they are some sort of victim.

“Sam Bankman-Fried was not even close to being capable of such an illusion,” he commented.

The declarations include a deadline for Silbert to accept the proposal by 4 PM ET on July 6 or risk legal action. Watching how the situation plays out will be interesting because it is the culmination of a dispute between several significant businesses in the sector.

Friday Is the Deadline For DCG

As part of the agreement, DCG will cover any settlement payments to the FTX and Alameda bankruptcy estates that exceed $300 million overall. DCG will also be expected to contribute $100 million to the Genesis bankruptcy estate.

DCG will keep all of the money it receives from the sale of Genesis Global Trading.

Two debt tranches and a forbearance payment total three different types of payments. The first installment, in the sum of $275 million, is due on or before the planned support agreement date of July 21.

The first loan tranche, worth $355 million, is due two years after the PSA. The second, worth $835 million, is due five years after the PSA.

The CEO of Lumida Wealth also tweeted  about the subject and is corresponding with Silbert and Winklevoss. He remarked that he doesn’t think DCG will make the deadline.

The past few months have been difficult for DCG. Gemini, owned by Cameron Winklevoss, received a $630 million loan in May, which it could not repay. Silicon Valley Bank’s demise severely impacted it. Following the failure of the bank, the company is currently searching for new partners.

Due To the Bankruptcy of 3AC in 2022, DCG Losses Surpassed $1B

The bankruptcy of the cryptocurrency hedge fund Three Arrows Capital (3AC) caused losses of approximately $1 billion for the venture capital conglomerate for cryptocurrency, Digital Currency Group (DCG), in 2022.

According to its Q4 2022 investor report, DCG lost $1.1 billion last year. The company stated that the results “reflect the impact of the Three Arrows Capital default upon Genesis” in addition to the “negative impact” of declining cryptocurrency prices.

Genesis, DCG’s loan division, declared bankruptcy under Chapter 11 in late January. Genesis, the company’s biggest creditor, provided a $2.36 billion loan to the now-bankrupt hedge fund 3AC. In July 2022, 3AC filed for bankruptcy.

DCG reported fourth-quarter losses of $24 million and revenues of $143 million. DCG’s total revenue for 2022 was $719 million. The company has $5.3 billion in total assets, $262 million in cash and liquid assets, and $670 million in investments, including shares in its Grayscale trusts. Divisions of Grayscale’s asset management subsidiary and DCG’s bitcoin mining company Foundry Digital retained the remaining assets.

Authorities in the United States are apparently looking into DCG’s business practices. They assert that internal transfers are the main subject of the investigation. Due to a number of issues, DCG had to shut down its brokerage business TradeBlock.

Winklevoss Warns Investors Of the Risk After SEC Rejects Bitcoin ETFs

Recently, Cameron Winklevoss, has unleashed a torrent of criticism at the U.S. Securities and Exchange Commission (SEC). According to him, the SEC is unintentionally directing investors into high-risk, unregulated crypto goods by consistently rejecting applications for Bitcoin exchange-traded funds (ETFs).

The Winklevoss twins have been requesting SEC approval for their own Bitcoin ETF for ten years, but no decision has been made. Therefore, according to Winklevoss, money is being directed into “poisonous” products like the Grayscale Bitcoin Trust (GBTC). The trading price for GBTC is approximately 30% below Bitcoin’s price in terms of net asset value, which Winklevoss considers extremely unfair.

However, other factors at play are concerning as well. Additionally, GBTC levies a “astronomical” 2% yearly fee, which contrasts with the average of 0.40% noted in a survey conducted by financial services company Morningstar in July 2022.

The movement of American investors to “unlicensed and unregulated” offshore platforms like FTX, according to Winklevoss, is even more alarming. He even goes so far as to call this occurrence “one of the largest financial frauds in recent history.”

On the contrary, a number of organizations are criticizing the SEC for continuing to refuse to approve Bitcoin ETFs. Several companies, including BlackRock, Fidelity, WisdomTree, Invesco, Valkyrie, and ARK Invest, recently applied for approval, amendment, or renewal of a spot Bitcoin ETF.