Gemini Files Lawsuit Against DCG and CEO Barry Silbert Over Alleged Genesis Fraud

By 0xK2 07/8/23 12:13 AM

Gemini, the popular cryptocurrency exchange founded by Cameron Winklevoss and Tyler Winklevoss, has filed a lawsuit against Digital Currency Group (DCG) and its CEO, Barry Silbert, in a New York court. The lawsuit comes after Cameron Winklevoss published an open letter to Silbert, threatening legal action if DCG failed to respond by July 7.

Gemini’s open letter, written on behalf of 232,000 Earn users, sheds light on the ongoing troubles surrounding Genesis, a company owned and controlled by DCG. According to the letter, these users currently have over $1.2 billion worth of assets trapped within the Genesis platform.

Cameron Winklevoss took to Twitter to share the news of the lawsuit, accusing Silbert of being the “architect and mastermind” behind the alleged fraud against creditors. Winklevoss claimed that Silbert was directly and personally involved in perpetrating the fraudulent activities.

2/ The complaint tells the whole story, but let’s start here: when Gemini notified Genesis it would be terminating the Earn program in October 2022, Barry reached out to set up a meeting to induce Gemini to continue Earn. He did this knowing Genesis was massively insolvent. pic.twitter.com/cY8H8IfnaH

— Cameron Winklevoss (@cameron) July 7, 2023

The open letter outlines a series of events leading up to the lawsuit. It alleges that when Gemini notified Genesis of the termination of the Earn program in October 2022, Silbert reached out to set up a meeting to induce Gemini to continue Earn. This move occurred despite Silbert’s knowledge of Genesis’s massive insolvency.

Winklevoss further accuses Genesis of hiding its financial troubles and spreading false information. In June 2022, when Three Arrows Capital (3AC) collapsed, creating a $1.2 billion hole in Genesis’s balance sheet, Genesis allegedly claimed that DCG had stepped in to absorb the losses. However, according to Winklevoss, this was a “carefully crafted lie.” DCG supposedly provided a sham 10-year promissory note to Genesis with a minimal interest rate, which was worth only a fraction of its face amount, making Genesis wildly insolvent.

The lawsuit alleges that Silbert, DCG, and Genesis conspired to create false financial reports, misrepresenting the true state of Genesis’s financial health to Gemini and other creditors. Winklevoss claims that the promissory note was falsely labeled as a “Current Asset” and a “receivable” on falsified balance sheets. He also accuses DCG executives, including Mark Murphy, the current President of DCG and former COO at the time of the alleged fraud, of being involved in the deception.

According to Winklevoss, DCG’s direct participation in the alleged fraud has caused significant damage to Gemini and hundreds of thousands of Earn users. The lawsuit seeks to hold DCG and Silbert accountable for their actions.

This lawsuit marks a significant development in the ongoing legal battle surrounding Genesis and its impact on Earn users. As the case unfolds in the New York court, the cryptocurrency community and investors will be closely watching the outcome, as it may have implications for the broader industry and the accountability of major players within it.

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