Barry Silbert, the chief executive officer of crypto venture capital company Digital Currency Group (DCG), rejected claims that the company borrowed US$1.675 billion from its crypto lending arm Genesis Global Capital that it hasn’t repaid. The allegation came from Cameron Winklevoss, the co-founder of crypto exchange Gemini, who says users of his exchange have hundreds of millions of dollars frozen at Genesis as a result.
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- Winklevoss said Genesis owes Gemini users US$900 million in an open letter to Silbert posted on Twitter on Monday. He claims the funds have been frozen by Genesis because it lacks liquidity after DCG failed to repay a US$1.675 billion loan to its Genesis unit.
- Winklevoss said he was writing on behalf of 340,000 users who “entrusted more than $900 million of their assets to you.” He said Silbert ignored proposals made on Dec. 17 and Dec. 25 to resolve the issue, calling the behavior “bad faith stall tactics.”
- Silbert responded to Winklevoss on Twitter, stating “DCG did not borrow $1.675 billion from Genesis” and claimed DCG has made all interest payments due to Genesis. Silbert said DCG had also delivered a resolution proposal to Genesis and Gemini on Dec. 29 and had no response.
- In a follow-up tweet, Winklevoss called Silbert’s comment “completely disingenuous,” asking Silbert to explain how DCG owes Genesis the US$1.675 billion if it did not borrow the amount. Silbert has not responded to Winklevoss as of publication.
- In a letter to shareholders in November, DCG said it took out a US$575 million loan from its Genesis subsidiary and owes it a US$1.1 billion promissory note to cover a liquidity crunch due to exposure to the collapse of the Three Arrows Capital hedge fund earlier in the year.
- DCG’s Genesis crypto lending platform paused withdrawals of assets on Nov. 16, citing “abnormal withdrawal requests” while revealing that it had US$175 million locked in the collapsed FTX exchange, which froze accounts and filed for bankruptcy on Nov. 11, 2022.
- In turn, the Winklevoss-owned Gemini exchange halted withdrawals on its interest-bearing Earn program as the program used Genesis as a trading partner.
- On Dec. 27, 2022, Gemini was sued by investors, alleging fraud and violations of securities laws.
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