In a recent open letter to Barry Silbert, Digital Currency Group (DCG) CEO Cameron Winklevoss, co-founder of popular cryptocurrency exchange Gemini, reignited the ongoing saga surrounding the alleged fraudulent behavior of DCG and its subsidiary, Genesis. With over $1.2 billion in assets trapped in Genesis, Winklevoss represents 232,000 Earn users who have been severely impacted by DCG’s actions.
In a strongly worded letter, Winklevoss accuses Silbert and his company of fostering a culture of lies, deception and financial misconduct.
Final offer for DCG
THE letter begins with a reminder of the dire situation facing 232,000 Earn users whose funds are locked in Genesis. Winklevoss points out that 229 days have passed since Genesis halted withdrawals, and 174 days have passed since his last open letter to Silbert. He points out that DCG’s actions have been far from honorable, alleging a culture of lies and deceit that has been well documented in public records.
Update: an open letter to @BarrySilbert pic.twitter.com/ErsYpcEjQD
—Cameron Winklevoss (@cameron) July 4, 2023
A striking aspect of the letter is Winklevoss’s comparison of Silbert’s conduct to that of Sam Bankman-Fried, the founder of bankrupt FTX. He says: “Even Sam Bankman-Fried was not capable of such an illusion. In the end, he at least acknowledged how much his actions had hurt others and tried to make things right. This reference to Bankman-Fried underscores how bad the situation is and how serious the charges are.
The core of the Winklevoss charges lie in a series of alleged fraudulent actions taken by Silbert and DCG to buy time and avoid taking responsibility for the current situation. According to the open letter, in June and July 2022, Silbert, DCG and Genesis knowingly misled Earn’s creditors and users into believing that DCG had absorbed $1.2 billion in losses incurred by Genesis. In reality, no such absorption occurred and instead a questionable long-dated promissory note was used to create a facade of financial stability.
Winklevoss argues that instead of seeking a true resolution, Silbert focused on raising capital to repay a $630 million loan owed to Genesis, in an effort to bolster DCG’s position for future litigation over the promissory note. The protracted mediation process further complicated matters, leading to soaring professional fees and hampering the relief sought by Earn users.
In response to the continued frustration and lack of progress, Winklevoss presents Silbert with a better and final offer, setting a deadline for his acceptance. If Silbert does not comply within 72 hours (until July 6, 4 p.m. EST), Winklevoss is threatening to take legal action against DCG and Silbert personally. This lawsuit would outline Silbert’s personal liability for covering up Genesis’ insolvency and potentially pave the way for Earn users to pursue similar actions.
The situation remains tense and unpredictable as the crypto community watches closely to see how the drama unfolds. The accusations made by Winklevoss against Silbert and DCG cast a shadow of doubt on DCG’s practices. Remarkably, DCG is the parent company of Grayscale Investments, a leading cryptocurrency asset management firm that holds over 630,000 BTC in its Grayscale Bitcoin Trust.
As the clock approaches the 72-hour deadline, the fate of $1.2 billion in trapped assets hangs in the balance, leaving many wondering how this high-stakes showdown will affect the cryptocurrency landscape in the days ahead. and the weeks to come.
At press time, Bitcoin price was hovering below the yearly high of $31,416, trading at $31,050.
Featured image from Vanity Fair, chart from TradingView.com