How Barry Silbert Responds to Winklevoss Cheating Allegations

Is the Digital Currency Group (DCG) at risk of bankruptcy? Was the crypto company involved with FTX and Sam Bankman-Fried? And was Genesis botched after the fall of Three Arrows Capital (3AC)? DCG CEO Barry Silbert commented on these and other questions last night. Customer funds from the crypto exchange Gemini in the amount of 900 million US dollars are stuck after a payout stop at DCG’s subsidiary Genesis. After alleged delaying tactics on the part of Silbert, Gemini founder Cameron Winklevoss gave him an ultimatum. Apparently without any reaction. Allegations of lies and accounting fraud followed, as well as calls for Winklevoss to resign.

According to DCG CEO Silbert, Winklevoss’ complaints are a “desperate and unconstructive publicity stunt.” This was followed by an update on the situation of Genesis and DCG that the crypto community had been waiting for for a long time.

DCG CEO responds to Winklevoss allegations

In it, Silbert reflects on the beginnings of his company and its role in building the crypto sector. The news platform CoinDesk and the largest Bitcoin fund in the world, GBTC, are part of his company’s portfolio. Among them, however, is the lending platform Genesis, which has been in trouble since the FTX bankruptcy.

Crypto exchange Gemini had almost $900 million in customer funds parked there, which are now stuck. After seemingly unsuccessful negotiations, Gemini co-founder Cameron Winklevoss went on the offensive. The accusation: The DCG covered up the insolvency of Genesis. Funds flowed illegally between the parent company and the subsidiary. Barry Silbert is a fraud, claims Winklevoss.

After a long silence, there was a reaction from the DCG boss – his most detailed for months. And yet rather meaningless. He continues to avoid the specific allegations. The year 2022 is the “most difficult for him [seines] life”. It is also “challenging to see your own integrity and good intentions in question”. The rest of his speech contained a few phrases.

It continues to strive to “build a better financial system”, “grow together” with the rest of the sector and position itself for “long-term success”. This is necessary because the reputation and credibility of the crypto sector has been destroyed by “a wave of unprecedented fraud and criminal behavior”.

DCG: Answers only conditionally informative

At least the information content had some places FAQ section of DCG’s statement. The question-and-answer catalog was probably written under the scrutiny of a legal adviser – at least that’s how it reads. In addition to some basic (and obvious) answers, there were also somewhat detailed statements about the company network of the DCG.

The parent company owes its own subsidiary a total of 1.6 billion US dollars. About 1.1 billion US dollars were taken over by Genesis after the fall of 3AC. That means: DCG assumed the debt and promised to make future repayments of 3AC to Genesis until 2023. The most important thing: Should Genesis actually have to file for bankruptcy, the billions would not be due immediately.

What is new is that DCG provided the subsidiary with 340 million US dollars in capital after the 3AC collapse. In his allegations, Winklevoss spoke of illegal transactions between DCG and Genesis. Investigations are already underway in the USA. Whether it is this payment or others is still unclear. Also because DCG wants to have “no knowledge” about it.

Otherwise, the remaining speculations were answered in a foreseeable way: DCG was not involved in the Terra LUNA collapse and the relationship with FTX, Sam Bankman-Fried, Alameda Research and 3AC was at best remotely business. DCG emphasized that, also with regard to the switch at Genesis, it is an otherwise separate business unit from the subsidiary.

Gemini continues to escalate

Elsewhere, on January 9, the Dutch stock exchange Bitvavo rejected an offer by the group to pay off its debt, as stated in a customer update called. The reason: DCG offered to repay only 70 percent immediately. However, the stock exchange is certain that its debtor can pay the full amount.

Meanwhile, Gemini continues to escalate. As the news medium Coindesk reports, the crypto exchange now wants her earn program quit to put further pressure on Genesis. Because by terminating the business relationship, Genesis is obliged to “return all assets outstanding in the program”. The situation therefore remains tense.

At least the absence of an immediate insolvency could have made some investors optimistic. The GBTC fund Grayscale, under the umbrella of the DCG, is considered an indicator of trust in the company network. For a few days, shares in it have been trading closer to the actual price of Bitcoin again. This could suggest that institutional investors are buying out of newly gained confidence. Just like Cathie Wood recently.