The Winklevoss twins threaten CEO DCG after the bankruptcy of Genesis

the winklevoss twins, Cameron and Tylerthreatened to sue the CEO of Digital Currency Group (DCG) over $900 million of Gemini customer funds currently frozen within DCG subsidiary Genesis.

Cameron and Tyler Winklevoss, founders of the Gemini cryptocurrency exchange, claim that DCG and its CEO Barry Silbert are unwilling to give creditors a “fair deal.”

“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.” 

Cameron Winklevoss alleges that DCG and Silbert committed fraud against at least 340,000 Gemini Earn users.

He added, “Unless Barry and DCG come to their senses and make a fair offer to creditors, we will file a lawsuit against Barry and DCG imminently.”

The Winklevoss twins claim that Gemini users lent $900 million to Gemini before the lending platform stopped withdrawals. On Thursday, the lending platform Filed bankruptcy.

“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. 

The Genesis bankruptcy filing showed that the lending platform owed $3.5 billion to the 50 largest creditors. According to the filing, Genesis owes 766 million dollars for Gemini Trust Company.

Genesis-Gemini feud: SEC sues both

The feud began over Gemini Earn, a product he promoted Yields up to 8% on customer deposits. With Earn, Gemini lent client money to Genesis, which it invested in the crypto markets.

With the cryptocurrency markets soaring, the capital has produced great returns. This made it attractive to investors at a time when Real returns on deposits were negativeThanks to federal incentives.

However, the cryptocurrency markets crashed in 2022, eliminating returns in the space. The final nail in the coffin was the collapse of FTX, a cryptocurrency exchange that held out $175 million in Genesis deposits. This resulted in Genesis suspending withdrawals in November 2022.

The suspension of withdrawals and the eventual bankruptcy left Gemini Earn without their money. Now, Cameron Winklevoss and Barry Silbert are in a public fight over who is responsible for users’ funds.

To make matters worse, the Securities and Exchange Commission (SEC) got involved in the situation. On January 13, 2023, the Securities and Exchange Commission Lawsuit against both entities To offer unregistered securities. The situation highlights the dangers of unregulated cryptocurrency lending platforms, for both users and founders.

The $900m loss of consumer deposits is already attracting regulators’ attention. The SEC lawsuit against Gemini and Genesis could set an important legal precedent that could bring more regulation to crypto.

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