The Co-Founder of Gemini – Cameron Winklevoss – said he could sue the CEO of Digital Currency Group – Barry Silbert – for allegedly defrauding over 340,000 Earn users.
The threat comes shortly after Genesis (a subsidiary of DCG) filed for Chapter 11 bankruptcy protection.
The Verbal Fight Goes on
The partnership between Genesis and Gemini started at the end of 2020, and in 2021 they began offering the Gemini Earn program to retail investors.
However, the crash of FTX disrupted the operations of Genesis and its parent company, Digital Currency Group, ultimately affecting the aforementioned collaboration.
As CryptoPotato reported, Genesis (which halted users’ withdrawals at the end of November last year) owes $900 million to more than 340,000 Gemini customers. The Wiklevoss-led trading venue has set up a creditors’ committee to retrieve those funds but to no avail so far.
Genesis could not cope with its problems and, earlier this week filed for bankruptcy protection. Shortly after the news broke, Winklevoss threatened Silbert with taking “direct legal action:”
“Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently,” he stated.
On the other hand, he argued that the bankruptcy filing is a “crucial step” that could allow Gemini customers to recover their assets. Genesis will become subject to judicial oversight and “be required to provide discovery into the machinations that brought us to this point,” the American investor explained.
Winklevoss assured that his platform will use “every tool available” in the bankruptcy court to maximize recovery for its affected clients.
“We also believe that — in addition to owing creditors all of their money back — Genesis, DCG, and Barry owes them an explanation. Bankruptcy court provides a much-needed forum for that to happen. Sunlight is the best disinfectant,” he concluded.
The Start of the Spat
Winklevoss claimed at the beginning of 2023 that DCG owes Genesis over $1.6 billion. He maintained that the main person to be blamed for that “mess” is Barry Silbert, who allegedly took those funds from “schoolteachers to fuel greedy share buybacks” and “illiquid venture investments.”
Silbert refuted those accusations, saying:
“DCG did not borrow $1.675 billion from Genesis. 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 your advisors a proposal on December 29th and has not received any response.”
The quarrel escalated last week when Winklevoss urged the Board of DCG to remove CEO Barry Silbert immediately. He accused the latter of making false statements, such as absorbing the $1.2 billion loss suffered after the failure of Three Arrows Capital (3AC).
Gemini’s boss further insisted that Silbert has proven himself “unfit” to run DCG and has not attempted to resolve the creditors’ issues.
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