Gemini Trust Co., a crypto exchange platform with a product called Earn that allows users to lend out crypto holdings in return for interest payments, has had withdrawals frozen since mid-November.
Cameron Winklevoss, co-founder of the company, recently posted an open letter on Twitter addressed to Digital Currency Group (DCG) CEO Barry Silbert, accusing Silbert of engaging in stall tactics to delay a resolution that would reinstate customers' abilities to withdraw funds from Earn. Federal prosecutors have launched investigations into DCG and its subsidiaries including Genesis, which had partnered with Gemini.
In his letter, Winklevoss noted that Silbert is aware that "DCG and Genesis are beyond comingled" and called for "an end to this nightmare" on behalf of Earn users, whom he described as "tired" and "scared" after six weeks of being unable to make withdrawals. He also accused Silbert of using funds from Genesis customers to speculate on risky trades and failing to pay the money back.
"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 back the $900 million that you owe, while helping you preserve your business," Winklevoss wrote in the letter. "However, it is now becoming clear that you have been engaging in bad faith stall tactics... Every time we ask you for tangible engagement, you hide behind lawyers, investment bankers, and process. After six weeks, your behavior is not only completely unacceptable, it is unconscionable... 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) ~$1.675 billion. This is money that Genesis owes to Earn users and other creditors. You took this money...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."
Silbert has denied Winklevoss' accusations in a tweet, responding, "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"
Authorities including federal prosecutors in Brooklyn and the U.S. Securities and Exchange Commission (SEC) are now seeking documents and interviews related to Silbert's crypto empire and are scrutinizing transactions between DCG and Genesis, Bloomberg reported recently. Genesis halted withdrawals in the wake of FTX's declaration of bankruptcy in November, but a source told Bloomberg that the probe into DCG began prior to the FTX collapse.
"DCG has a strong culture of integrity and has always conducted its business lawfully,” a DCG spokesperson said. "We have no knowledge of or reason to believe that there is any Eastern District of New York investigation into DCG.”
Silbert, whose net worth is approximately $3.2 billion, is the founder and CEO of DCG, which is a conglomerate of five crypto companies with numerous subsidiaries, a Forbes report said. Through the subsidiaries, DCG has invested in more than 200 crypto startups.