Cameron Winklevoss accused DCG CEO Barry Silbert of being a fraud and mastermind behind the scheme perpetrated by DCG and Genesis Capital.
Gemini, the cryptocurrency exchange founded by the Winklevoss, has filed a civil lawsuit against Digital Currency Group (DCG) and its CEO Barry Silbert. The lawsuit stems from a dispute regarding the bankruptcy of Genesis Capital, a company with which Gemini had a major business partnership.
Gemini co-founder Cameron Winklevoss announced the lawsuit on social media and accused Silbert of fraud and improper conduct for his role in concealing Genesis’ problems.
DCG said in a statement that the allegations and lawsuit were a "publicity stunt" by Winklevoss Gemini to evade responsibility for running the Gemini Earn program.
The company said the allegations against it and its employees were baseless, defamatory and completely false. DCG added that it remained committed to finding an amicable solution for all parties involved in the bankruptcy proceedings.
Allegations
Winklevoss said that Three Arrows’ collapse “created a $1.2 billion hole” on Genesis’ balance sheet, and that DCG and Silbert made it “seriously insolvent” as early as June 2022. However, rather than alerting investors and creditors, the company helped conceal this fact.
Winklevoss said:
“Barry, DCG, and Genesis all conspired to produce false financial reports to hide the truth from Gemini and its creditors.”
Winklevoss claims that the main architect and mastermind of this fraud was Silbert, and that DCG’s top leadership knew about and participated in “hiding the truth.”
The exchange partnered with Genesis to facilitate the Earn program. However, when Genesis went bankrupt, it halted withdrawals, effectively locking up approximately $1.45 billion worth of assets belonging to Gemini Earn program users.
The exchange decided to terminate the plan and asked DCG to repay the debt within five years.
According to the Gemini founder, Silbert directly intervened and tried to dissuade Gemini from ending its Earn program with Genesis, even though he knew the company was essentially bankrupt. Silbert told the exchange that Genesis’ troubles were temporary and would be “a matter of time.”
Winklevoss claimed:
"This fraud spread to the highest levels. Barry Silbert and other DCG executives were directly involved in these lies, lying again and again to hide the truth from Gemini and other creditors."
Genesis had told creditors that all was well because DCG had stepped in to cover losses it never intended to absorb.
According to Winklevoss, DCG never provided any cover or real capital, but instead gave Genesis a “fake” 10-year promissory note with no actual value. The companies then falsified financial documents to pretend that it was a “receivable” worth $1.1 billion.
He said:
"A report pretends this fake 10-year promissory note is a liquid asset. Total lie and total misrepresentation."
Those troubles ultimately led to Genesis filing for bankruptcy in January, six months after the company was reportedly bankrupt.
Gemini has set a July 6 deadline for DCG and Genesis to resolve the repayment issues or face litigation. DCG, Genesis and Silbert are also being sued in a separate class action lawsuit by multiple creditors of Genesis.
Winklevoss’s allegations against Silbert and DCG on these issues are merely accusations and have not been proven.
