According to Winklevoss, Digital Currency Group subsidiary Genesis owes $1.675 billion to Gemini. The controversy led three Gemini Earn customers to file a class-action arbitration request.
On Monday, Cameron Winklevoss, the co-founder of cryptocurrency exchange Gemini, accused Digital Currency Group CEO Barry Silbert of “bad faith tactics to get in the loop” in settling a $900 million debt payment.
The publicly released letter from one of the Winklevoss twins to Silbert alleged that Gemini had waited six weeks trying to bring in Genesis Global Capital and its parent company Digital Currency Group for a redemption discussion, but failed.
“For the past six weeks, we have done everything we can to engage with you in a good faith and collaborative manner in order to reach a consensual resolution for you to pay the $900 million you owe, while helping you preserve your business,” the Winklevoss letter read. “However, it is now becoming clear that you have been engaging in bad faith stall tactics.”
Winklevoss revealed that Gemini sent two payment proposals to Silbert and his companies, but has yet to receive a response or provision to resolve the issue. He added: “Every time we ask you for a tangible commitment, you hide behind lawyers, investment bankers, and process. After six weeks, your behavior is not only completely unacceptable, it is unconscionable.”
According to Winklevoss, Digital Currency Group subsidiary Genesis owes $1.675 billion to Gemini, which belongs to “Earn users and other creditors.”
Winklevoss vs. Silbert
Silbert also responded to the allegations, tweeting that DCG “did not borrow $1.675 billion from Genesis,” and that “DCG has never missed an interest payment to Genesis and is current on all loans outstanding; next loan maturity is May 2023.”
DCG delivered to Genesis and its advisors a proposal on December 29th and has not received any response. However, Winklevoss disputed these claims, revealing that Genesis borrowed the proceeds with promissory notes. His tweet reads as follows:
“There you go again. Stop trying to pretend that you and DCG are innocent bystanders and had nothing to do with creating this mess. It’s completely disingenuous. So how does DCG owe Genesis $1.675 billion if it didn’t borrow the money? Oh right, that promissory note…”
Class Action Arbitration Request
In response to the public dispute between Winklevoss and Silbert, three Genesis users have filed a request for class action arbitration against Genesis Global Capital and Digital Currency Group. They alleged that Genesis failed to return their assets and those of other Gemini Earn users and thus violated the Master Agreement between the two companies. They further accused Genesis of hiding its insolvency status from its clients.
Gemini and Winklevoss twins are also facing a class action lawsuit from investors for failing to register their Earn products as securities.
Gemini abruptly halted redemption of its interest-bearing crypto products, offered under Gemini Trust Earn, in mid-November, just after Sam Bankman-Fried’s FTX filed for bankruptcy. The move was made as the collapse of FTX triggered a liquidity crisis at Genesis Trading, one of the main borrowers of Gemini’s credit products.
By Audy Castaneda
