(Bloomberg) — The fallout from Sam Bankman-Fried’s crypto empire has become even more troubling, with digital asset entrepreneur Cameron Winklevoss accusing fellow entrepreneur Barry Silbert of “” “good faith containment tactics” and mixed funds in his corporation that Winklevoss says has left $900 million in client assets in needless limbo since the crisis. FTX crisis.
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Gemini Trust Co., founded by Winklevoss and his twin, has halted buybacks on a lending product called Earn, which gives investors the potential to generate interest up to 8% for their digital coins. It did so by lending them to Genesis Global Capital, one of the companies owned by Silbert’s Digital Currency Group.
The Monetization pause came in November after Genesis halted both acquisitions and new loans at its lending unit due to exposure to FTX. Genesis has told customers that it could take “several weeks” to find a way forward and bankruptcy could be a possibility.
Winklevoss, facing his own pressure from angry customers having their Gemini accounts locked out and a lawsuit alleging fraud, in an open letter Monday said he had provided Silbert with numerous suggestions. proposed solutions to the problem, including the most recent proposal on December 25. He said Silbert “this mess is entirely yours to create,” citing the $1.675 billion in debt DCG owes Genesis, this money is used for other business purposes within Silbert’s corporation. “This is the amount that Genesis owes Earn users and other creditors.”
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“We have nothing to lose when you have done your best to try and firewall DCG from the problems you created at Genesis,” Winklevoss writes. “You should skip this novel because we all know what you know – that DCG and Genesis can’t be mixed.”
Read more: Genesis balance sheet reveals lending site across Silbert empire
Silbert in a tweeted response denied some of the allegations in Wilkevoss’ letter, saying that “DCG did not borrow $1.675 billion from Genesis” and “never missed an interest payment on Genesis and currently has all outstanding debts,” without providing further details. Silbert also claims DCG sent a dispute resolution proposal to Genesis and Winklevoss advisors on December 29, but received no response.
For his part, Winklevoss asked Silbert to “publicly commit to working together to resolve this issue,” which he says affects more than 340,000 Earn customers by January 8. He did not say what would happen. if no agreement is reached by that time .
The dispute is the latest example of how recent crises in cryptocurrencies are fracturing long-standing ties between the top levels of the crypto industry, turning the “all-in” mentality. we will make it” into a focus on every company for its own sake. It also highlights the network of connections between the largest digital asset companies and their affiliates.
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Winklevoss claims the $1.675 billion DCG borrowed from Genesis was used “to drive greedy share buybacks, illiquid venture capital and Grayscale NAV kamikaze trading,” referring to a business Silbert’s other business, Grayscale Investments, the largest of which is the Grayscale Bitcoin Trust. This happens, he said, “all at the expense of creditors and all for your personal gain.”
In statements and tweets, DCG has tried to emphasize that it is separate from Genesis and insulated from its troubles. Following the suspension of Genesis, DCG said in a tweet that “this temporary action does not affect the business of DCG and our other wholly owned subsidiaries.”
Silbert, in a letter to shareholders in November, said that the loans between the companies were made “in the ordinary course of business.” He noted that DCG has $575 million in debt to Genesis. In the letter, he also describes a $1.1 billion promissory note, due in June 2032, which he says comes as the parent company steps in to take on debts from Genesis. regarding the collapse of the digital asset hedge fund Three Arrows Capital.
Winklevoss’ positive stance comes as Gemini and its founders face a lawsuit from investors accusing the company of fraud, alleging that the Earn product is in fact an interest-bearing account. which it cannot register as securities.
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(More background on DCG’s relationship with Genesis, more info from Winklevoss letter.)
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