Winklevoss Twins Threaten to Sue DCG CEO After Genesis Bankruptcy
The Winklevoss twins, Cameron and Tyler, threatened to sue the Digital Currency Group (DCG) CEO over the $900 million in Gemini client funds currently frozen inside DCG subsidiary Genesis. Cameron and Tyler Winklevoss, cofounders of the crypto exchange Gemini, claim that DCG and its CEO Barry Silbert are unwilling to give a “fair deal” to creditors. Cameron Winklevoss alleges that DCG and Silbert committed fraud against at least 340,000 users of the Gemini Earn program. “Unless Barry and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently,” he added. The Winklevoss twins claim that Gemini users lent $900 million to Gemini before the lending platform stopped withdrawals. On Thursday, the lending platform filed for bankruptcy. Genesis’ bankruptcy filing showed that the lending platform owes $3.5 billion to the top 50 creditors. According to the filing, Genesis owes $766 million to Gemini Trust Company. The feud started over Gemini Earn, a product that promoted up to 8% returns on customer deposits. With Earn, Gemini loaned client money to Genesis, which invested it in crypto markets. As crypto markets soared, the capital produced significant returns. This made it attractive to investors at a time when real returns on deposits were negative, thanks to the Federal Reserve’s stimulus. However, crypto markets crashed in 2022, annihilating returns in the space. The final nail in the coffin was the collapse of FTX, a crypto exchange that held $175 million in Genesis deposits. This resulted in Genesis suspending withdrawals in November 2022. The suspension of withdrawals and the ultimate bankruptcy left Gemini Earn without their funds. Now, Cameron Winklevoss and Barry Silbert are in a public battle over who is responsible for user funds. To make matters worse, the Securities and Exchange Commission (SEC) got involved in the situation. On January 13, 2023, the SEC sued both entities for offering unregistered securities. The situation highlights the risks of unregulated crypto lending platforms, both to users and founders. The loss of up to $900 million in consumer deposits is already attracting regulatory attention. The SEC suit against Gemini and Genesis could set an important legal precedent that could bring more regulation to crypto.
“While we have been working around the clock to negotiate an acceptable solution, Barry Silbert and DCG,” Cameron Winklevoss said, “continue to refuse to offer creditors a fair deal.”
“The good news is that, by seeking the protection of the bankruptcy court, Genesis will be subject to judicial oversight and be required to provide discovery into the machinations that brought us to this point,” Cameron Winklevoss said.
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Text source: DailyCoin.com
