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Cameron winklevoss, the founder of Gemini, accused genesis, its parent company the digital currency group and its Barry Silbert leader of outright fraud.
In an open letter, winklevoss says gemini and its 340,000 winning users have been fraudulently.
Genesis claimed to be solvent when they actually weren’t, Winklevoss said, “inducing lenders to continue making loans to Genesis.”
Genesis lent $2.36 billion to Three Arrow Capital (3AC) which collapsed this summer. The security wasn't enough to cover it, letting Genesis lose $1.2 billion.
Obviously, for those affected, it's a different issue.
Cameron Winklevoss, Gemini's founder, accused Genesis, its parent company the Digital Currency Group and its CEO Barry Silbert of outright fraud. In an open letter, Winklevoss stated Gemini and its 340,000 Win users were scammed.
Genesis claimed to be creditworthy, but this was not the case, Winklevoss said, Genesis loaned $2.36 billion to Three Arrow Capital (3AC), which collapsed during the summer.
This was “false and misleading,” Winklevoss said as DCG had not absorbed losses, they had just given a promissory note – a piece of paper stating they’ll give them $1 billion in a decade.
Instead, dcg has concluded a 10-year promissory note with genesis at an interest rate of 1% – payable in 2032." winklevoss added an email to employees at Gemini by Matthew Ballensweig, and then head of commerce and genesis lending, ballensweig claimed that the losses had been absorbed through the dcg balance sheet and deducted from it, "leaving the genesis with enough capital to go on," it was "false and deceptive," said Winklevoss that dcg had not absorbed the losses, they had just given a promissory note—a piece of paper indicating that they would give them $1 billion over ten years.
Winklevoss says this was false, stating:
In fact, DCG had not given Genesis any real money to compensate for the losses of 3AC.
Instead, DCG has a 10-year promissory note with Genesis at a 1% interest rate – due in 2032."
Winklevoss added Matthew Ballensweig in an email to the Gemini employees, and Trading & Credit Manager at Genesis, Ballensweig indicated that the losses were absorbed by DCG's balance sheet and offset by it, "leaving Genesis with enough money to keep going."
Winklevoss goes on to say that Genesis's losses were the result of greed as they were ready to "lend out of imprudence" to 3ac because they were using money for "kamikaze grayscale net asset value (nav) trade." Who is the genesis was ready to loan money, bitcoin mostly, because they were used to buy gray-scale stocks that were then used as collateral to the genesis to potentially get more of Bitcoin and thus encircle the stocks again.
This was equivalent to a swap, winklevoss claims, where bitcoin was given for shares with genesis taking a wager that the shares would be more valuable than the coins.
A short-term asset is cash, cash equivalent or other assets that can be traded in cash within a period of one year, Winklevoss says, not a promissory note.
He says a new management will allow them to work together to achieve an out of court solution, but “there is no path forward as long as Barry Silbert remains CEO.”
Shareholders of the Grayscale Bitcoin Trust (GBTC), which is also owned by DCG, have revolted against Barry Silbert with 20% of the total shareholders signing up to change management.
Beyond the charge of fraud, the more interesting part of this letter is that winklevoss does not threaten a lawsuit. Asks instead to withdraw Barry Silbert as dcg's CEO. He says a new direction will allow them to work together to find an extrajudicial solution.
Over and above the accusation of fraud, The most interesting part of this letter is that winklevoss is not a threat to prosecution, but instead requests the deletion of Barry Silbert as dcg's CEO, but "there is no way forward as long as Barry Silbert remains CEO."Bitcoin confidence shareholders grayscale (gbtc), which belongs to dcg as well, revolted against Barry Silbert with 20% of all shareholders subscribing to the change of direction.
Winklevoss joining them makes for an interesting twist.
There is no resolution for Gemini customers win so far.
Instead, they received an e-mail advising them that the Gemini Earn program has ended.
He says that a new direction will enable them to work together to arrive at an out-of-court solution.
