Gemini co-founder says Genesis ‘engaging in bad faith stall tactics’

Gemini cryptocurrency exchange co-founder Cameron Winklevoss is pressing crypto lender Digital Currency Group (DCG), to return $900 million in customer funds that Gemini claims it lent to DCG.

In an open letter on Twitter to DGC's CEO Barry Silbert, Winklevoss stated Gemini has been waiting for the money for 47 days. Gemini has a crypto lending product called Earn in partnership with DCG's crypto firm Genesis. 

Silbert's firm halted customer withdrawals in November, following the collapse of major crypto exchange FTX. The move left customers of this product unable to redeem their frozen funds.

"These users aren't just numbers on spreadsheet, they are real people," Winklevoss said, referencing a "a single mom who lent her son's education money to you" and a "husband and wife who lent their life savings to you."

Silbert's firm wrote in a letter to clients on Dec. 7 stating it was working to preserve client assets and strengthen liquidity, adding that it would take "weeks rather than days" to form a plan.

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"For the past six weeks, we have done everything we can to engage with you in a good faith and collaborative manner in order to reach a consensual resolution for you to pay back the $900 million that you owe, while helping preserve your business, Winklevoss wrote.

"It is now becoming clear you are engaging in bad faith stall tactics," he added. 

Crypto lender Genesis had sought emergency loan of $1 Billion

Silbert’s response

In a reply to Winklevoss posted less than an hour after the open letter, Silbert tweeted, "DCG did not borrow $1.675 billion from Genesis."

"DCG has never missed an interest payment to Genesis and is current on all loans outstanding; next loan maturity is May 2023, he added. "DCG delivered to Genesis and your advisors a proposal on December 29th and has not received any response."

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And it didn’t stop there

Winklevoss retaliated claiming if the company didn't borrow the money, why did they sign a promissory note.

On Dec. 27, the U.S. District Court in Manhattan revealed Tyler and Cameron Winklevoss, founders of the Gemini cryptocurrency exchange, were hit with another lawsuit from investors over Gemini Earn.

Allegedly, Gemini participated in fraud and violated other securities laws because the Earn program was not registered and investors could not assess risks properly.

The suit also alleges Earn stopped paying investors in November. 

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Crypto lenders, the de facto banks of the crypto world, boomed during the pandemic, attracting retail customers with double-digit rates in return for their cryptocurrency deposits.

Genesis had almost $3 billion in total active loans at the end of the third quarter, its website said. Last year, Genesis extended $130.6 billion in crypto loans and traded $116.5 billion in assets.

Genesis and Digital Currency Group owe customers of the Winklevoss twins' crypto exchange Gemini $900 million, the Financial Times reported on Saturday.

Reuters contributed to this report.

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