Gemini Co-Founder Alleges DCG Fraud, Loss of User Funds
• Cameron Winklevoss has released an extensive letter alleging that Genesis and Digital Currency Group have defrauded Gemini and more than 340,000 Gemini Earn users.
• The letter claims that instead of taking steps to restructure and protect users, the fund allegedly marked a 10-year promissory note down as a current asset.
• The letter also alleges that Genesis was lending to Three Arrows Capital without regard to the risk of these loans, which was then passed on to the users of Gemini Earn.
Cameron Winklevoss, co-founder of Gemini, has recently released an extensive letter that claims that Genesis Global Capital LLC, a $2.8 billion crypto lending arm of Genesis Trading and its parent company, Digital Currency Group (DCG) have defrauded Gemini and more than 340,000 Gemini Earn users. The letter alleges that, instead of taking action to restructure and protect users, the fund tried to defraud others into believing that $1.2 billion of working capital had been injected into the company.
However, the letter claims that instead of this, the company marked a 10-year promissory note down as a current asset. According to the letter, current assets normally refer to cash, cash equivalents, or other assets that can be exchanged into cash within one year. But, Winklevoss claims that a promissory note with a principal repayment due in 10 years falls outside the definition of a ‘current asset’ by a country mile.
The letter also describes how Genesis was allegedly lending to Three Arrows Capital without regard to the risk of these loans. Three Arrows Capital was apparently redirecting investment into Grayscale Investments’s GBTC, which limited the growing discount of the Trust. This risk was then passed on to the users of Gemini Earn.
Winklevoss alleges that greed is ultimately what has driven these investment decisions and the loss of Gemini Earn users’ funds. He also concludes that there is no path forward as long as Barry Silbert remains CEO of DCG. He claims that Silbert has proven himself unfit to run DCG and unwilling and unable to make necessary changes to ensure that users’ funds are protected.