Both Gemini and Genesis are experiencing financial troubles, and the former has just been sued for money held in its Earn program.
The collapse of Sam Bankman-crypto Fried’s empire, Terra LUNA, and 3AC last year is having a crippling effect on the crypto market. Digital asset entrepreneur Cameron Winklevoss accuses fellow businessman Barry Silbert of “bad faith stall tactics” and the mixing of funds within his conglomerate that Winklevoss claims have left $900 million in customer assets needlessly in limbo since FTX’s meltdown.
Winklevoss and his twin brother launched Gemini Trust Co., which halted redemptions on Earn, a lending program that allowed users to earn up to 8% percent on digital currency holdings. It accomplished this by lending them to Genesis Global Capital, a business that is a part of Silbert’s Digital Currency Group.
Genesis stopped both redemptions and new loan originations at its lending subsidiary in November due to its exposure to FTX, which led to the Earn halt. Genesis has informed clients that finding a solution may take “weeks,” and that bankruptcy may be an option.
Winklevoss claimed in an open letter on Monday that he had given Silbert several proposals to fix the problem, most recently on December 25. This was in response to pressure from Silbert as well as from irate customers who had been locked out of their Gemini accounts and a lawsuit alleging fraud.
This situation, he wrote Silbert, “is entirely of your own doing,” highlighting the $1.675 billion that DCG owed Genesis but had instead used for other corporate objectives within Silbert’s conglomerate. “This is money that Genesis owes to Earn users and other creditors.”
“It’s not lost on us that you’ve been working desperately to try and firewall DCG from the problems that you created at Genesis,” Winklevoss wrote. “You should dispense with this fiction because we all know what you know — that DCG and Genesis are beyond commingled.”
Silbert responded to Wilkevoss’ letter by denying many claims in a tweet, without going into further detail, such as “DCG did not borrow $1.675 billion from Genesis” and “never missed an interest payment to Genesis and is current on all loans due.” Silbert further asserted that Genesis and Winklevoss advisers were sent a resolution plan by DCG on December 29 but that no response had been received.
Winklevoss requested Silbert to “publicly commit to working together to remedy this problem” by January 8; he claims that it affects more than 340,000 Earn customers. He didn’t specify what would happen if an agreement couldn’t be reached by then.