(Kitco News) - The public spat between Cameron Winklevoss, co-founder of the cryptocurrency exchange Gemini, and Barry Silbert, CEO of the Digital Currency Group (DCG), escalated to the next level on Tuesday as Winklevoss called on the board of DCG to dismiss Silbert as its CEO for being “unfit” to run the company.
In an open letter posted on Twitter, Winklevoss claimed that Silbert and the DCG subsidiary Genesis Global Capital have defrauded the users of Gemini’s Earn program by making materially false statements regarding the state of Genesis’ balance sheet.
“I'm writing to let you know that Gemini and more than 340,000 Earn users have been defrauded by Genesis Global Capital LLC, together with its parent company Digital Currency Group, its founder and CEO Barry Silbert, and other key personnel,” he wrote. “These parties conspired to make false statements and misrepresentations to Gemini, Earn users, other lenders, and the public at large about the solvency and financial health of Genesis.”
Winklevoss alleged that the fraud was perpetrated with the goal of misleading lenders into believing that DCG had taken on the losses that Genesis suffered as a result of the collapse of Three Arrows Capital (3AC) so that they would continue to loan money to Genesis. “By lying, they hoped to buy time to dig themselves out of the hole they created,” he said.
This latest open letter from the Gemini co-founder follows last week's letter in which he implored Silbert to work with Gemini and “publicly commit” to finding a resolution regarding the $1.675 billion in funds that DCG owes to Genesis – $1.1 billion of which is owed to Gemini and its Earn users – by January 8.
The proposed deadline came and went without any follow-through from Silbert, which prompted Winklevoss to post the second open letter on Tuesday.
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According to Winklevoss, the problems at Genesis started when it lent 3AC more than $2.3 billion, which ultimately resulted in a loss of $1.2 billion when 3AC went bankrupt in June 2022. At that point, Winklevoss claims that Silbert, DCG and Genesis orchestrated "a carefully crafted campaign of lies" which falsely attempted to show that DCG had contributed $1.2 billion worth of funds to support Genesis.
Due to these actions and their disregard for Gemini investors, Winklevoss called on the DCG board to dismiss Silbert as its CEO.
"There is no path forward as long as Barry Silbert remains CEO of DCG," said Winklevoss. "He has proven himself unfit to run DCG and unwilling and unable to find a resolution with creditors that is both fair and reasonable. As a result, Gemini, acting on behalf of 340,000 Earn users, requests that the Board remove Barry Silbert as CEO.”
Aside from Silbert’s initial response to the first letter from Winklevoss in which he claimed that DCG submitted a proposal to Genesis and Winkelvoss’ advisors on Dec. 29, “which has not received any response,” Silbert has remained radio silent on the issue and has not issued any additional public statements. At the time of publication, DCG had not responded to a request for comment.
