• Cameron Winklevoss, Co-Founder of Gemini, released a letter alleging that Genesis and its parent company, Digital Currency Group (DCG), defrauded Gemini and over 340,000 Gemini Earn users.
• The letter claims that after Genesis Global Capital LLC, Genesis Trading’s $2.8 billion crypto lending arm, realized losses of at least $1.2 billion, the fund tried to defraud others into believing that $1.2 billion of working capital had been injected into the company.
• The letter concludes with a paragraph which reads, “There is no path forward as long as Barry Sibert remains CEO of DCG. He has proven himself unfit to run DCG and unwilling and unable to protect the interests of its investors.”
Cameron Winklevoss, the Co-Founder of the cryptocurrency exchange Gemini, recently released a letter detailing his claims of fraud against Genesis and its parent company, Digital Currency Group (DCG). The letter alleges that the two companies defrauded Gemini and more than 340,000 users of the Gemini Earn service.
Winklevoss claims that Genesis Global Capital LLC, the cryptocurrency trading arm of Genesis Trading, had suffered losses of at least $1.2 billion in the wake of the collapse of the crypto hedge fund Three Arrows Capital. Instead of taking action to restructure and protect users, the fund attempted to defraud others into believing that $1.2 billion of working capital had been injected into the company. This was allegedly accomplished by marking a 10-year promissory note as a current asset, which is normally used to refer to cash, cash equivalents, or other assets that can be exchanged into cash within one year. Winklevoss argues that a promissory note with a principal repayment due in 10 years falls outside the definition of a ‘current asset’ by a country mile.
Winklevoss also states that Genesis was lending to Three Arrows Capital without regard to the risk of these loans, as the crypto hedge fund was apparently redirecting investment into Grayscale Investments’s GBTC, which limited the growing discount of the Trust. This risk was then passed on to the users of Gemini Earn. The letter claims that greed is ultimately what has driven these investment decisions, and is likely responsible for the loss of Gemini Earn users’ funds.
The letter concludes with a paragraph which reads, “There is no path forward as long as Barry Sibert remains CEO of DCG. He has proven himself unfit to run DCG and unwilling and unable to protect the interests of its investors.” In other words, Winklevoss believes that Barry Silbert and other key personnel at the companies are ultimately to blame for the alleged fraud and the losses suffered by Gemini Earn users.
The claims made in Cameron Winklevoss’s letter are extremely serious, and if proven true, could have serious repercussions for Genesis, Digital Currency Group, and the individuals implicated in the alleged fraud. It is yet to be seen if any legal action will be taken in response to the claims, or if any restitution will be made to the affected users of Gemini Earn.