The Winklevoss twins threaten SW DCG CEO after Genesis bankrupts the Daily Queen

The Winklevoss twins threaten CEO DCG after the bankruptcy of Genesis
  • Cameron and Tyler Winklevoss threaten to sue the CEO of Digital Currency Group.
  • The Winklevoss twins claim that the now bankrupt Genesis owes $900 million to Gemini users.
  • The Securities and Exchange Commission is suing Genesis and Gemini over an unauthorized securities offering.

The Winklevoss twins, Cameron and Tyler, have threatened to sue the CEO of Digital Currency Group (DCG) over $900 million of Gemini client funds currently frozen inside 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.”

Cameron Winklevoss said, “While we worked around the clock to negotiate an acceptable solution, Barry Silbert and DCG continued 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 for bankruptcy.

“The good news is that by seeking bankruptcy court protection, Genesis will be subject to judicial oversight and will be required to provide discovery of the machinations that have brought us to this point,” said Cameron Winklevoss.
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 to the Gemini Trust Company.

Genesis-Gemini feud: SEC sues both

The dispute began over the Gemini Earn, a product that promoted up to 8% returns 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 negative, thanks to Federal Reserve stimulus.

However, the cryptocurrency markets crashed in 2022, eliminating returns in the space. The final nail in the coffin was the collapse of FTX, a crypto exchange with $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 SEC filed a lawsuit against both entities for offering unregistered securities. The situation highlights the dangers of unregulated cryptocurrency lending platforms, for both users and founders.

on the flip side

  • The SEC’s filing against both Genesis and Gemini shows that neither party is completely without blame in this situation. In particular, Gemini may have misrepresented the nature of the Gemini Earn as an investment tool that they were offering to users.

Why should you bother

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.

See the original on the Daily Queen

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