Crypto exchange Gemini takes its trouble with DCG and Barry Silbert to court
- Gemini launched a lawsuit against DCG and its head claiming misrepresentation of facts and financial statements.
- DCG class the accusations of wrongdoings as “baseless, defamatory, and completely false”.
Cameron Winklevoss – Gemini’s co-founder – announced on Twitter that the company will be taking legal action against Digital Currency Group [DCG] and its CEO – Barry Silbert. The exchange filed a lawsuit against both entities in the New York court. The basis of the lawsuit is the recovery of Gemini Earn funds from Genesis, the subsidiary of DCG. And, this dispute has been ongoing since January 2023.
Moreover, this action comes days after Cameron had presented Barry Silbert with a “final offer” for the chapter 11 discussions. The offer called for a $1.465 billion payment in cash, Bitcoin, and Ethereum. In the same talk, Winklevoss claimed that DCG had missed a $630 million payment to Genesis.
Gemini’s war against DCG
In the lawsuit, Winklevoss claimed that Silbert misrepresented several facts about Genesis’ solvency and DCG’s funding for its subsidiary. Notably, the co-founder claimed that DCG did not absorb the losses incurred by Genesis after the collapse of 3AC – a Singapore-based hedge fund. The lending arm of DCG, at this time, had a $1.2 billion hole. Instead, the parent company issued a 10-year promissory note. Winklevoss further said,
“Barry, DCG, and Genesis all conspired to create false financial reports to hide the truth from Gemini and creditors. One report pretended that this phony 10-YEAR promissory note was a “Current Asset.” A total lie and complete misrepresentation.”
Furthermore, Cameron also stated that several other DCG executives were involved in this “fraud”. He claimed that DCG’s President – Mark Murphy – knew Genesis’ financial reports “lied about DCG’s financial support”. However, he did not correct the reports and even “directly lied” that the company absorbed the losses. Winklevoss added,
“The whole promissory note scheme shows that Barry and DCG were in on the fraud. Its design and execution requires full participation and cooperation from Barry, DCG, and Genesis, and only “works” if it is hidden from creditors.”
DCG responds to the allegations
Notably, Digital Currency Group issued a statement soon after Winklevoss made the lawsuit public. The statement called the lawsuit “yet another publicity stunt from Cameron Winklevoss to deflect blame and responsibility from himself and Gemini.” Moreover, the statement calls all the accusations of “wrongdoings” against the firm and its executives “baseless, defamatory, and completely false.” It further reads,
“From day one, DCG has remained committed to reaching an amicable solution for all parties to the Genesis bankruptcy. Senior DCG leadership has been working around the clock over the course of multiple months in active negotiation with representatives of the Office Unsecured Creditors Committee and Ad Hoc Committee to reach a deal while Gemini leadership was MIA”
Additionally, DCG claimed that Taylor and Cameron Winklevoss were not present during the recent in-person meetings. The statement also read that Genesis’ bankruptcy case was reaching a “conclusion soon”.
Speaking about not being part of the mediation process, Cameron stated that they were looking for a “real deal with real value”. He also said,
“@DCGco and @BarrySilbert fail to address or deny a single assertion in our 33-page complaint. Exactly which parts are “baseless, defamatory, and completely false”? The indisputable fact is that DCG and Barry were directly involved in misleading creditors as to the financial condition of Genesis.”