Cameron Winklevoss: ‘There is no path forward as long as Barry Silbert remains CEO of DCG’

January 10, 2023 Coin Telegraph

Recursive trades between Grayscale trust and the Three Arrows Capital hedge fund allegedly inflated assets and fees, according to open letter from the Gemini president.

Cameron Winklevoss, co-founder of the cryptocurrency exchange Gemini, has penned an open letter to the board of Digital Currency Group, or DCG, saying CEO Barry Silbert was “unfit” to run the company.

In a Jan 10. letter, Winklevoss claimed Silbert and Genesis Global Capital — a subsidiary of DCG — had defrauded more than 340,000 users who were a part of Gemini’s Earn program. The letter followed a Jan. 2 appeal on Twitter to Silbert directly, in which the Gemini co-founder said Genesis owed Gemini $900 million, accusing the CEO of hiding “behind lawyers, investment bankers, and process.”

According to Winklevoss, Genesis lent more than $2.3 billion to Three Arrows Capital, a move which ultimately left the crypto firm with a loss of $1.2 billion once the hedge fund failed in June 2022. He claimed Silbert, DCG, and Genesis orchestrated "a carefully crafted campaign of lies" starting in July 2022 in an effort to show DCG had injected the funds into Genesis.

"There is no path forward as long as Barry Silbert remains CEO of DCG," said Winklevoss. "He has proven himself unfit to run DCG and unwilling and unable to find a resolution with creditors that is both fair and reasonable. As a result, Gemini, acting on behalf of 340,000 Earn users, requests that the Board remove Barry Silbert as CEO.”

Earn Update: An Open Letter to the Board of @DCGco pic.twitter.com/eakuFjDZR2
— Cameron Winklevoss (@cameron) January 10, 2023

This story is developing and will be updated.

Report: Federal Prosecutors in New York Probe Digital Currency Group and Subsidiary Genesis

January 7, 2023 Bitcoin.com

Crypto Biz: SBF has his day in court; Barry Silbert accused of ‘stalling’ over frozen funds

January 6, 2023 Coin Telegraph

Barry Silbert

The founder of FTX pleaded not guilty to all criminal charges related to the collapse of crypto exchange FTX.

After Sam Bankman-Fried was handed over to United States officials last month, his top lieutenants — Caroline Ellison and Gary Wang — had already been cooperating with the feds. The two pleaded guilty to a slew of charges and agreed to assist the Southern District of New York to investigate FTX and their former boss. SBF had his day in court on Jan. 3 and pled not guilty to all criminal charges.

As the saga surrounding SBF and FTX intensified, crypto capital market company Digital Currency Group was facing problems of its own. Its CEO, Barry Silbert, has been accused of “stalling tactics” over frozen funds.

This week’s Crypto Biz dissects the latest on SBF, Digital Currency Group (DCG) and Core Scientific.

Sam Bankman-Fried enters not guilty plea for all counts in federal court

SBF pled not guilty to all criminal charges related to the collapse of FTX, setting the stage for what’s likely to be a four-week trial beginning Oct. 2, 2023. The disgraced founder of the now-bankrupt exchange faces eight criminal counts and up to 115 years in prison for his alleged role in defrauding investors and money laundering. We know that FTX co-founder Gary Wang and former Alameda CEO Caroline Ellison have already pled guilty to similar charges — effectively rolling over on SBF, presumably for more favorable sentences. The SBF saga is only just getting underway. Prepare yourself accordingly.

Sam Bankman-Fried has arrived in court for his arraignment. We’re told he will plead not guilty to all the charges against him. pic.twitter.com/yakSLkOus8
— Connell McShane (@connellmcshane) January 3, 2023

Cameron Winklevoss pens open letter to Barry Silbert about Gemini’s blocked funds

Barry Silbert was put on blast this week by none other than Cameron Winklevoss in an open letter penned on Jan. 2. Cameron’s gripe stems from crypto lending firm Genesis Global, which is part of Barry Silbert’s Digital Currency Group. At the time the letter was penned, Genesis withdrawals had been halted for 47 days, effectively barring Gemini from recouping $900 million in funds it had lent to Genesis as part of the Gemini Earn program. “Every time we ask you for tangible engagement, you hide behind lawyers, investment bankers, and process,” Winklevoss said. Gemini has problems of its own after it was sued by investors for allegedly engaging in fraud and violating securities laws.

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
— Barry Silbert (@BarrySilbert) January 2, 2023

Grayscale ETH trust nears record 60% discount as nerves continue over DCG

Grayscale, another Digital Currency Group company, continues to rattle investors after its Ethereum Trust (ETHE) traded at a nearly 60% discount to the underlying value of its assets. A discount to net asset value, or NAV, usually occurs when there is low demand and a lot of supply, leading the market price to be lower than the NAV. In December, Grayscale’s Bitcoin Trust (GBTC) saw its discount reach 34% amid insolvency rumors surrounding Digital Currency Group. Some commentators have snarked that DCG may be biding time until Bitcoin’s price recovers. If that’s the case, we could be waiting a long time.

Every Grayscale trust and their respective premium % pic.twitter.com/TYQf5FmeXt
— db (@tier10k) January 3, 2023

Core Scientific shuts down 37K mining rigs it was hosting for Celsius

Crypto contagion has begun spreading to the Bitcoin mining industry, with Core Scientific filing for Chapter 11 bankruptcy in Texas last month. Core Scientific may have gotten some reprieve this week after bankrupt crypto lender Celsius Network, which collapsed in epic fashion last July, agreed to let the miner shut off more than 37,000 of its rigs. From what we know, Core Scientific was hosting tens of thousands of mining rigs on behalf of Celsius and ending this agreement should provide the miner with an additional $2 million in monthly revenue — so long as Bitcoin stays around $16,700. Of course, there’s no guarantee that Bitcoin has found its bottom just yet.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto delivered directly to your inbox every Thursday.

Gemini’s Cameron Winklevoss Insists Digital Currency Group Needs to Resolve Liquidity Issues in Open Letter to CEO Barry Silbert

January 3, 2023 Bitcoin.com

Crypto investors sue Winklevoss twins over interest accounts on Gemini

December 28, 2022 Coin Telegraph

Cameron Winklevoss

Plaintiffs have alleged that the products have not been registered, which prevented them from receiving disclosures to better assess the risks of using Gemini Earn.

Tyler and Cameron Winklevoss, founders of Gemini cryptocurrency exchange, are reportedly facing a new lawsuit from investors over interest-earning program Gemini Earn.

Disgruntled investors have filed a lawsuit against Gemini founders, accusing the firm of fraud and violations of the securities laws, according to a report by Bloomberg.

Filed on Dec. 27 in Manhattan federal court, the complaint states that Winklevoss brothers refused to “honor any further investor redemptions” after halting those due to exposure to troubled trading firm Genesis Global Capital.

The plaintiffs alleged that the products have not been registered, which prevented them from receiving disclosures to better assess the risks of using Gemini Earn. Launched last year, Gemini Earn platform was designed to generate as much as 8% in interest on their crypto holdings.

Gemini started facing major issues on Gemini Earn in mid-November, or shortly after the first reports indicated FTX’s liquidity issues.

Since halting withdrawals in November, Gemini Earn remains unavailable for users as the platform has millions of dollars stuck on Genesis. According to some reports, Crypto lender Genesis and its parent company Digital Currency Group (DCG) allegedly owe up to $900 million to Gemini clients.

On Dec. 20, Cameron Winklevoss took to Twitter to announce that Gemini came up with a plan on behalf of the creditor committee to resolve the liquidity issues at Genesis and DCG and recover the assets.

Earn Update: Today, Houlihan Lokey presented a plan on behalf of the Creditor Committee to resolve the liquidity issues at Genesis and DCG and provide a path for the recovery of assets.
— Cameron Winklevoss (@cameron) December 20, 2022

On Dec. 7, Genesis issued a letter to its customers claiming that its withdrawal freeze was likely to last a few weeks to come up with a solution to recover users’ assets. The firm halted withdrawals on Nov. 16, citing “unprecedented market turmoil” caused by the collapse of FTX.

Gemini did not immediately respond to Cointelegraph’s request for comment.

Gemini Forms Creditors Committee With Houlihan Lokey to Resolve Genesis Liquidity Issues

December 18, 2022 Bitcoin.com

Gemini gets regulatory greenlight in Italy, Greece amid lending halt

November 30, 2022 Coin Telegraph

Cameron Winklevoss

Winklevoss’ Gemini exchange received the latest regulatory approvals days before its lending product Gemini Earn faced major issues.

Winklevoss brothers’ cryptocurrency exchange Gemini continues expanding in Europe, announcing new regulatory approvals in Italy and Greece.

Gemini has registered as a virtual currency operator with Italy’s payments services regulator, the Organismo Agenti E Mediatori (OAM), the firm announced on Nov. 30.

The crypto exchange has also received registration as a custodial wallet provider and provider of virtual currency exchange with Greece’s Hellenic Capital Markets Commission (HCMC).

According to official data, the OAM registration was issued on Nov. 3, while the HCMC granted its approval to Gemini on Nov. 7.

The new registrations, combined with Gemini’s electronic money institution authorization from the Central Bank of Ireland, officially allow the exchange to provide crypto services to their customers in Italy and Greece. The approvals also aim to demonstrate Gemini’s compliance with applicable Italian and Greek Anti-Money Laundering and Counter Terrorist Financing regulations.

As of November 2022, Gemini operates in more than 65 countries, including new jurisdictions like Croatia, Cyprus, Czech Republic, Denmark, Hungary, Ireland, Latvia, Liechtenstein, Portugal, Romania, Slovenia, Sweden and others, the firm said.

The latest registrations came before Gemini encountered major issues on its lending platform known as Gemini Earn, which is designed to allow investors to get 8% in interest by lending their cryptocurrency. The product has reportedly halted withdrawals due to its connection with the troubled crypto trading firm Genesis Global Capital, with Gemini allegedly having $700 million of customer money locked in it.

According to Gemini status, Gemini Earn started experiencing issues with deposits on Nov. 16, a few days after initial reports on FTX’s liquidity issues surfaced. At the time of writing, the product remains unavailable, while all other Gemini services, including exchange trading engine, Gemini Credit Card and others operate normally.

Gemini Earn was launched in 2021 in the United States, providing services through a partnership with Genesis Global Capital, which halted withdrawals on Nov. 16 as a consequence of the ongoing FTX contagion.

“We continue to work with Genesis Global Capital — the lending partner of Earn — and its parent company Digital Currency Group to find a solution for Earn users to redeem their funds,” Gemini said in a tweet from Nov. 21.

On Nov. 29, Gemini also took to Twitter to announce Gemini Trust Center, assuring its customers that their accounts’ assets are segregated from Gemini’s assets. "Gemini is a full-reserve exchange and custodian. This means that all customer funds held on Gemini are held 1:1 and available for withdrawal at any time," the company stressed.

As previously reported, Gemini was one of exchanges hit by the ongoing crypto bear market, cutting up to 20% of its staff this year. The exchange is also among platforms targeted by the United States Senate Finance Committee as part of the information request regarding customer protection measures in the aftermath of the FTX collapse.

Cameron Winklevoss steps down from Gemini’s European board

October 17, 2022 Coin Telegraph

Cameron Winklevoss

Despite the shift, Cameron and Tyler Winklevoss continue to run the cryptocurrency exchange's global operations.

Cameron Winklevoss, a co-founder of cryptocurrency exchange Gemini, has stepped down from the European company board of directors, according to a Companies House filing from Oct. 12.

As indicated in a statement sent to the local press, Cameron continues to lead Gemini's global operations alongside his twin brother Tyler Winklevoss:

“We can confirm this change was filed with Companies House and brings local leadership onto the board of directors to reflect the growth of Gemini's business in the UK and Europe. Cameron and Tyler Winklevoss continue as President and CEO at Gemini.”

As per the filings, Gillian Lynch, the head of Gemini in Ireland and Europe, takes Blair Halliday's seat on the board. Blair was U.K. managing director at Gemini for two years before moving to the rival exchange Kraken this month, according to his LinkedIn profile.

In July, Gemini announced a registration as a virtual asset service provider (VASP) by the Central Bank of Ireland (CBI) after having received an electronic money institution (EMI) authorization from the CBI that allowed the company to issue electronic money, provide electronic payment services and handle electronic payments for third parties months before.

In June, the United States Commodity Futures Trading Commission (CFTC) filed a lawsuit against Gemini claiming that the company made false or misleading statements in 2017 during in-person meetings and in documents, violating the Commodity Exchange Act and other regulations.

The agency was making an evaluation of the potential self-certification of a Bitcoin futures contract to be based on the spot Bitcoin price determined by an auction held on Gemini’s digital asset trading platform.

Also this year, the exchange laid off over 10% of its staff as part of “extreme cost-cutting” during the crypto winter, just two months after the company's co-founders were featured as crypto billionaires in the Forbes list, with fortunes of $4 billion each.

Cointelegraph reached out to Gemini, but did not receive a response at the time of publication.