Gemini sues Digital Currency Group and CEO Barry Silbert over Genesis Capital insolvency

Cryptocurrency exchange Gemini, founded by the Winklevoss twins, has filed a civil lawsuit against Digital Currency Group (DCG) and its CEO Barry Silbert. The lawsuit stems from a dispute over the bankruptcy of Genesis Capital, with which Gemini had a significant business relationship.

Gemini co-founder Cameron Winklevoss announced The lawsuit was reported on social media along with several allegations of fraud and foul play against Silbert, who helped cover up the Genesis issue.

In a statement, the DCG said the allegations and lawsuits were “publicity stunts” by the Winklevoss twins to avoid responsibility for running the Gemini Earn program.

The company said the allegations against the company and its employees were “baseless, defamatory and outright false.” DCG added that it remains committed to finding a friendly solution for all parties involved in the bankruptcy proceedings.

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Winklevoss said the Three Arrows Capital debacle had “opened a $1.2 billion hole” in Genesis’ balance sheet, putting it in “significant insolvency” as early as June 2022. But instead of alerting investors and creditors, the company enlisted the help of hiding this fact. of DCG and Silbert.

Mr Winklevoss said:

“Barry, DCG and Genesis all conspired to create false financial statements to hide the truth from Gemini and creditors.”

Mr. Winklevoss claimed that Silbert was the primary “architect and mastermind” of this “fraud” and that the DCG’s top leadership was aware of and involved in the “cover-up of the truth.”

The exchange worked with Genesis to facilitate an earning program. However, when Genesis went bankrupt, it stopped withdrawals, effectively locking in about $1.45 billion worth of assets belonging to users of the Gemini Earn program.

The exchange decided to end the program and asked DCG to pay off its debt in five years.

According to Gemini founders, Silbert directly intervened and tried to dissuade Gemini from ending its acquisition program with Genesis, even though he knew Gemini was essentially bankrupt. It says. Silbert told the exchange that the problem with Genesis was temporary and stemmed from a “timing issue.”

Mr Winklevoss said:

“This cheating culminates. Barry Silbert and other DCG executives were directly involved in these lies and lied numerous times to hide the truth from Gemini and other creditors. .”

Genesis had told its creditors that DCG had intervened to cover the losses, so it was financially safe, but DCG had no intention of absorbing the losses.

Winklevoss said DCG did not provide any guarantees or “real capital” and instead gave Genesis a “fake” 10-year promissory note of no real value. The two companies then falsified their financial statements, disguising them as $1.1 billion worth of “bonds.”

He said:

“One report disguised this fake 10-year promissory note as a ‘liquid asset.’

Matters eventually culminated in Genesis filing for bankruptcy in January, six months after it allegedly filed for bankruptcy.

Gemini has set a July 6 deadline for DCG and Genesis to resolve the repayment issue, or it will file a lawsuit. DCG, Genesis and Silbert are also being sued by various Genesis creditors in a separate class action lawsuit.

Winklevoss’ claims against Silbert and DCG in these matters are mere claims and have not been proven.