Crypto exchange Gemini co-founders Tyler Winklevoss and Cameron Winklevoss (LR) on stage at the Bitcoin 2021 Convention in Miami, Florida.
Joe Ladle | Getty Images
Cameron Winklevoss, co-founder and president of digital currency exchange Gemini, accused the head of crypto conglomerate Digital Currency Group of engaging in “malicious” tactics after the incident. It claims to want to resolve a complex lending dispute with the company that surfaced.FTX’s collapse.
The controversy stems from an agreement Gemini signed with Genesis Global Capital, the lending arm of crypto investment firm Genesis Global Trading, a subsidiary of Digital Currency Group. Gemini offered users his high yield of 8% through the loan product Gemini Earn. To generate these revenues, Gemini lent user funds to Genesis Global Capital, which lent them to institutional investors.
Days after FTX filed for bankruptcy, Gemini Pause redemption of Gemini Earn Serving as Genesis Global Capital has also suspended new loan originations and redemptions. While Gemini has denied exposing Sam Bankman-Fried to his crypto empire, Genesis said in his Nov. 10 tweet that the company’s derivatives business is about $175 million locked inside his FTX. said it held funds from
Winklevoss wrote an open letter to Digital Currency Group boss Barry Silbert on Monday, refusing to meet Silbert again and again with the Gemini team to find a solution to the liquidity crisis facing Gemini Earn’s clients. claimed to have
Gemini Earn’s customers owed more than $900 million from Genesis, according to the letter.
“Over the past six weeks, we have engaged with you in a good faith and collaborative manner to help you maintain your business in order to reach a consensual settlement to repay the $900 million you owe. Winklevoss said in a letter publicly tweeted on Monday.
“We recognize that restructuring comes at an initial cost, and sometimes things don’t go as fast as we all hope. I have.”
Winklevoss accused Silver of hiding behind “lawyers, investment bankers and processes,” adding, “Six weeks later, your behavior is not only completely unacceptable, it is also unconscionable. ‘ added. He also argued that Digital Currency Group and Genesis are “beyond confusion.”
digital currency group Genesis owes $1.675 billionDebt consists of $575 million of debt maturing in May 2023 and a $1.1 billion promissory note issued by Genesis to Three Arrows Capital.
“Let me be clear, this mess is entirely your own creation. Digital Currency Group (DCG), of which you are the founder and CEO, has invested approximately $1.675 billion in Genesis (a wholly-owned subsidiary). I owe tens of thousands of dollars in debt,” Winklevoss said.
“This is money that Genesis owes to Earn users and other creditors. Facilitated scale NAV. [net asset value] AUM-inflated transactions that generate fees [assets under management] of your trust; all for your own personal benefit, all at the expense of your creditors. ”
In addition to Genesis, the digital currency group also owns the troubled digital asset manager Grayscale. Grayscale has his Bitcoin Trust trading at his 45% discount to the price of the underlying asset, even though Bitcoin is trading at its lowest price in years, and has its own I am facing difficulties.
“DCG does not owe Genesis $1.675 billion,” Silbert replied to Winklevoss’ tweet on Monday.
“DCG has not missed any interest payments to Genesis and is currently underway on all outstanding loans. The next loan maturity is May 2023,” he added. I submitted a proposal to Genesis and your advisor on May 29th, but have not received any response.”
Despite heated exchanges, Winklevoss said he hopes to reach a resolution to the liquidity crisis by Sunday. “We are ready and happy to work with you, but we are running out of time,” he said.
A Gemini spokesperson declined to comment further on the matter when contacted by CNBC.
Winklevoss’ charges against Silbert come as his cryptocurrency exchange Gemini faces legal threats from its users. A group of investors has filed a class action lawsuit against the company for selling Earn interest-bearing accounts without registering them as securities. Cryptocurrency lender BlockFi was forced to pay his $100 million fine to the Securities and Exchange Commission and 32 states.
Zhu Su, co-founder of Three Arrows Capital, also weighed in on the issue on Tuesday. In a Twitter thread, Hsu said that Digital Currency Group “had a significant loss this summer as it went bankrupt,” while other companies also felt the effects of the collapse of the algorithmic stablecoin TeraUSD. said he received it.Su, that company Went out of business Even as lawyers try to track him down after making risky bets across the industry, he remains active on Twitter and says he faces investigations from U.S. regulators. It is reported.
Gemini and Genesis are the latest companies to be caught in a troubling and tangled contagion that began with last year’s FTX bankruptcy.
Evgeny Gaevoi, founder and CEO of crypto market maker Wintermute, said in an interview in November that the industry’s contagion is expected to be widespread. According to Nov. 9, Wintermute itself had locked up funds in FTX, but the amount was “within its risk tolerance and would not have a material impact on its overall financial position.” Tweet.
— CNBC’s Ari Levy, MacKenzie Sigalos, and Rohan Goswami contributed to this report.