Gemini co-founder Cameron Winklevoss accused Digital Currency Group (DCG) CEO Barry Silbert of bad faith tactics over the $900 million debt owed by Genesis trading to Earn users.
In a Jan. 2 open letter, Winklevoss said Silbert employed stalling tactics and refused to meet stakeholders to resolve issues surrounding the situation.
The exchange co-founder gave Silbert a Jan. 8 deadline to resolve the issues.
According to Winklevoss, DCG owes its subsidiary Genesis $1.675 billion. He added that part of this debt was Gemini Earn users’ funds.
Winklevoss said DCG used the loan to “fuel greedy share buybacks, illiquid venture investments, and kamikaze Grayscale NAV trades that ballooned the fee-generating AUM of your Trust; all at the expense of creditors.”
Winklevoss added that Silbert was trying to firewall DCG from the problem of its subsidiary Genesis, but he noted that Genesis and DCG are beyond commingled.
Gemini halted withdrawals for its earn users on Nov. 16 citing, “abnormal withdrawal requests.” Since then, the exchange has formed an ad-hoc committee to resolve the issue.
Barry Silbert responded that DCG did not borrow $1.675 billion from Genesis. He also said DCG has no outstanding debt to Genesis, and the subsequent loan maturity is in May 2023. Silbert added:
“DCG delivered to Genesis and your advisors a proposal on December 29 and has not received any response.”
However, Winklevoss insists that DCG owes Genesis. Cameron told Silbert to stop pretending that he and DCG were “innocent bystanders and had nothing to do with creating this mess.” He further asked how DCG owes Genesis $1.675 billion if it didn’t borrow the money.
Financial analyst Ram Ahluwalia noted that DCG could face bankruptcy as it only takes three Earn creditors to initiate an involuntary bankruptcy petition.