Winklevoss vs Silbert – 2023’s First Crypto Beef

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  • Cameron Winklevoss and Barry Silbert have clashed over the continued freezing of Gemini funds on the Genesis platform
  • Gemini Earn customers have been unable to withdraw their funds for almost 50 days
  • Gemini prohibited withdrawals last year due to financial difficulties

Less than 48 hours into the new year, and crypto has its first beef. Cameron Winklevoss, co-founder of Genesis, and Barry Silbert, CEO of the troubled crypto investor Digital Currency Group, have been engaging in a public blame game over $900 million trapped on the Genesis platform, money that belongs to users of Gemini Earn, Geminis’ interest-bearing crypto account. It’s nearly 50 days since Genesis halted withdrawals citing financial difficulties, leaving Gemini Earn users high and dry. And Winklevoss, it seems, has had enough.

Winklevoss Accuses Silbert of Avoiding the Issue

The battle of words was started by the Gemini co-founder, who yesterday penned an open letter, published on Twitter, which accused Silbert’s Digital Currency Group of “engaging in bad faith stall tactics” over Genesis’ reluctance to restart withdrawals, among much else:

Winklevoss argued that Gemini Earn customers “deserve concrete answers and we are here to get them”, saying that Genesis was actively avoiding discussions over “the $900 million that you owe”, referring to the money that Gemini Earn customers have trapped with Genesis. He then went further, blaming the DCG for the mess it has found itself in:

The idea in your head that you can quietly hide in your ivory tower and that this will all just magically go away, or that this is someone else’s problem, is pure fantasy. To be clear, this mess is entirely of your own making. Digital Currency Group (DCG) — of which you are the founder and CEO — owes Genesis (its wholly owned subsidiary) –$1.675 billion. This is money that Genesis owes to Earn users and other creditors.

Winklevoss then got personal, saying that “DCG and Genesis are beyond commingled”, which is a potential breach of financial laws, and accusing Silbert personally of sidestepping the issue:

Everyone takes orders from you and always has. And anything you have done after the fact to pretend otherwise, won’t hold up. If instead, you had put all of this energy towards finding a resolution, we would have been done by now. Everyone would be in a better place, including you.

Winklevoss signed off on an ominous note, saying that Gemini remained “ready and willing to work with you, but time is running out.”

Silbert Argues with Winklevoss’ Figures

Silbert responded within an hour, taking issue first and foremost with Winklevoss’ description of Genesis’ financial position:

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. DCG delivered to Genesis and your advisors a proposal on December 29th and has not received any response.

Winklevoss hit back less than an hour later himself, calling Silbert’s claims that he and the Digital Currency Group were “bystanders and had nothing to do with creating this mess” as “completely disingenuous”. He finished by asking if Silbert would “commit to solving this by January 8th in a manner that treats the $1.1 billion promissory note as $1.1 billion.”

In November, Silbert aimed to calm the rumors around the Digital Currency Group’s solvency by stating the facts as he saw them – the Digital Currency Group has a liability to Genesis Global Capital of $575 million, which is due in May 2023, and there is a $1.1 billion promissory note that is due in June 2032 which was due to the group stepping in to assume certain liabilities from Genesis related to the Three Arrows Capital default.

January 8 Deadline Offered

It seems, then, that the disagreement then seems over the figures comes down to how the promissory note should be interpreted – does this count as debt? Investopedia says that promissory notes are a “debt instrument” that “lie somewhere between the informality of an IOU and the rigidity of a loan contract” in terms of legal enforceability. One such example is a student loan.

Silbert has yet to reply to Winklevoss’ demand for a resolution, with the latter offering a deadline of January 8 before, presumably, legal action will commence.