Gemini has escalated its conflict with Digital Currency Group (DCG) after approximately seven months since Genesis Global Trading, DCG’s lending arm, suspended withdrawals.
On Tuesday, Gemini co-founder Cameron Winklevoss presented Barry Silbert, the founder of DCG, with a “best and final offer” letter to settle the $1.465 billion debt owed to Gemini. Winklevoss’s letter carried a clear request, threatening legal action against Silbert and DCG if an agreement is not reached by July 6.
The proposed settlement further outlined payments in intervals and specified that they would be denominated in BTC, ETH, and U.S. dollars. Notably, the settlement also included a significant forbearance payment of $275 million, which Winklevoss expects to be fulfilled on July 21.
In the latest letter, Winklevoss accused Silbert of fraud, alleging that he knowingly lied to creditors, including Gemini, in 2022 regarding DCG’s absorption of the $1.2 billion losses incurred from Three Arrows Capital’s collapse. Winklevoss further claimed that DCG employed a “bogus long-dated promissory note” to address the financial shortfall while deliberately prolonging the mediation process to raise funds for repaying a $630 million loan.
Winklevoss also expressed frustration with Silbert’s actions, accusing him of playing the victim during the whole process.
“It takes a special kind of person to owe $3.3 billion dollars to hundreds of thousands of people and believe, or at least pretend to believe, that they are some kind of victim. Not even Sam Bankman-Friend was capable of such delusion,” said Winklevoss.
Notably, the long-drawn conflict arose from a partnership gone soar between the two sides regarding Gemini’s Earn product. Launched in early 2021, Gemini Earn was a high-yield program that allowed customers to lend their crypto assets to Genesis. Genesis then invested the funds in institutions and paid investors an 8% interest. However, following FTX’s collapse last November, Genesis halted customer withdrawals, leaving Gemini unable to repay its Earn customers.
In January, Winklevoss made a public statement alleging that approximately 340,000 participants in the yield-bearing product were owed around $900 million by Genesis. The exchange further shut down the Earn program and dissolved the master loan agreement between its customers and Genesis.
In response, Barry Silbert defended his integrity and good intentions in a letter to DCG shareholders, blaming the failures on the 2022 crypto winter. The two entities then turned to mediation without success, with Winkelvoss blaming Silbert for completely undermining the process.
That said, as the deadline looms, it will be interesting to see the outcome of the settlement negotiations, with a positive outcome potentially benefiting thousands of Earn users.