Disputes Between Gemini and DCG: Mystery Surrounds $1.7 Billion in Funding

The year 2023 has just begun with a new dispute in the cryptocurrency space. Cameron Winklevoss, co-founder of U.S. crypto exchange Gemini, has publicly accused Digital Currency Group (DCG) CEO Barry Silbert of "bad faith stall tactics" over the return of $900 million in debt.

DCG is one of the largest and most well-known crypto groups in the world, with Genesis, Grayscale, CoinDesk, Foundry, and Luno.

Gemini is Under Pressure

Last week, Tyler and Cameron Winklevoss, were sued by investors​ who claim the crypto asset exchange sold interest-bearing accounts which it failed to register as securities. 

Gemini Trust Earn products attracted investors with the potential for generating as much as 8% in interest on their holdings. In mid-November, though, Tyler and Cameron Winklevoss suddenly halted redemptions after a key partner, Genesis Global, became ensnared in the crypto contagion caused by the implosion of Sam Bankman-Fried's FTX.

"To be clear, this mess is entirely of your own making. Digital Currency Group (DCG) — of which you are the founder and CEO — owes Genesis (its wholly owned subsidiary) ca $1.675 billion. This is money that Genesis owes to Earn users and other creditors. You took this money — the money of schoolteachers — to fuel greedy share buybacks, illiquid venture investments, and kamikaze Grayscale NAV trades that ballooned the fee-generating AUM of your Trust; all at the expense of creditors and all for your own personal gain. It is now time for you to take responsibility for this and do the right thing," Winklevoss said In the letter.

Winklevoss noted that DCG borrowed $1.675 billion from Genesis, citing consolidated figures Silbert shared with investors last November that included a $575 million loan due in May and a $1.1 billion promissory note due in June 2032 in connection with the collapse of Three Arrows Capital.

"For the past six weeks, we have done everything we can to engage with you in good faith and collaborative manner in order to reach a consensual resolution for you to pay back the $900 million that you owe, while helping you preserve your business," Winklevoss added. "However, it is now becoming clear that you have been engaging in bad faith stall tactics."

Silbert Refutes Claims of Borrowing Money from Genesis

"DCG did not borrow $1.675 billion from Genesis," Silbert responded. "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 troubles at Genesis have called DCG's financial position into question, but DCG has tried to emphasize that it and Genesis are independent of each other and will not be affected by the collapse of FTX.