DCG: Winklevoss Complaints are “Desperate” Publicity Stunt

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  • The crypto geek fight between Cameron Winklevoss and Barry Silbert has continued apace in the last 24 hours
  • Winklevoss accused Digital Currency Group of fraud and demanded that Silbert be removed
  • Digital Currency Group called the claims a “desperate and unconstructive publicity stunt”

The crypto geek fight between Cameron Winklevoss and Barry Silbert has continued apace in the last 24 hours. Digital Currency Group (DCG) has dismissed a new open letter to its board by Genesis co-founder Winklevoss, in which he called for the resignation of Silbert as CEO, as a “desperate and unconstructive publicity stunt”. Winklevoss, who criticized the running of DCG in an open letter last week, yesterday accused DCG of privately lying to those with which it conducted business, publicly lying to outside investors, and even of accounting fraud. In response, DCG said that Winklevoss was simply trying to “deflect blame from himself and Gemini” for their present troubles.

Row Over Trapped Funds Sparks “Defamatory” Comments

The public feud began when Winklevoss penned his first open letter last week, in which he both offered an olive branch to Silbert and metaphorically assaulted him with it. The closure of withdrawals by the strapped-for-cash Genesis Global Capital last year, which funds the Gemini Earn program, left over $900 million of Gemini users’ money trapped on the Genesis platform.

Silbert replied on Twitter, saying that Winklevoss was wrong with his math but denying little else. Yesterday, Winklevoss took things up a notch by demanding the removal of Silbert from his role of CEO:

Winklevoss didn’t mince his words, alleging that Gemini users were “defrauded by Genesis Global Capital” who “conspired to make false statements and misrepresentations to Gemini” regarding the financial health of the company. It also called into question the financial dealings between Genesis, the Grayscale Bitcoin Trust and Three Arrows Capital, which folded in late June last year after borrowing $2.36 billion from Genesis.

The letter ended with a simple request:

As a result, Gemini, acting on behalf of 340,000 Earn users, requests that the Board remove Barry Silbert as CEO, effective immediately, and install a new CEO, who will right the wrongs that occurred under Barry’s watch.

The response from DCG was immediate. In its tweeted reply it accused Winklevoss and Gemini of trying to shirk its own responsibilities, saying that the company was trying to deflect attention away from its operations and that Gemini was “solely responsible for operating Gemini Earn and marketing the program to its customers.” In a nod to the accusations of fraud, DCG stated that it was “preserving all legal remedies in response to these malicious, fake, and defamatory attacks.”

Silbert Refuses to Step Down

Three hours after this exchange, Silbert himself published a letter to DGC shareholders which he translated into a tweet thread. In the letter, Silbert acknowledged that the past year had been the hardest of his life due to “bad actors and repeated blow-ups” which have “wreaked havoc on our industry, with ripple effects extending far and wide.” Silbert added that the impact on DCG has resulted in his “integrity and good intentions” being questioned.

However, in a move that will have disappointed Winklevoss, Silbert stated that he was going to redouble his efforts to get the good ship DCG afloat again by cutting costs and “making meaningful changes” to alight the company.

Silbert also included a Q&A to address the recent spate of criticism, “some of which is reasonable and some that is completely baseless and false”, in which he countered some of Winklevoss’ claims by affirming that the “DCG does not direct any trades, loans, or borrows for Genesis’ business.” These allegations are allegedly at the center of a federal investigation, although the letter states that, “DCG has no knowledge of or reason to believe that there is (a federal) investigation into DCG.”

The Q&A also attempted to throw cold water on the suggestions that DCG was $1.1 billion in the hole to Genesis over a promissory note issued to help Genesis out of its Three Arrows Capital-related whoopsy daisy, saying that “the $1.1B promissory note is not callable and does not contain any other similar features of a callable bond.”

You see, nothing to worry about.

Crypto Community Not Convinced

Winklevoss hasn’t responded to this latest missive, but it’s fair to say that the crypto community wasn’t wholly taken with Silbert’s attempted at openness and honesty:

No doubt Winklevoss will reply soon enough with a response to Silbert’s claims and we can enjoy another round of crypto geek boxing.