Key takeaways:
- Gemini has filed a lawsuit against the CEO, Barry Silbert, and the conglomerate DCG.
- The filing states that Gemini wants to recoup funds spent due to DCG and Silbert’s false, deceptive, and incomplete statements and omissions to Gemini.
Gemini, a US-based cryptocurrency exchange, has filed a lawsuit against the CEO Barry Silbert and the conglomerate Digital Currency Group (DCG) for allegedly defrauding creditors.
Gemini claimed DCG and Silbert were involved in a conspiracy involving the lending of “huge amounts of cryptocurrency and U.S. dollars” to Genesis in a court filing on July 7.
The filing states that Gemini wants to recoup funds spent due to DCG and Silbert’s false, deceptive, and incomplete statements and omissions to Gemini, as well as their involvement in “encouraging and facilitating Genesis’s fraud against Gemini.” It further declares that the business will explore all legal alternatives in the bankruptcy case of Genesis.
Cameron Winklevoss, the co-founder of Gemini, said on Twitter on July 7 that Silbert knew Genesis was “massively insolvent” when he tried to continue the Earn program.
Despite significant gaps in Genesis’s balance statement, the Winklevoss twins claimed that Barry Silbert had lied. Genesis’ problems began in June 2022 after the collapse of Three Arrows Capital (3AC). Winklevoss reveals this in his writing:
“When Three Arrows Capital (3AC) collapsed in June 2022, it blew a $1.2 billion hole in Genesis’s balance sheet. Instead of coming clean, Genesis claimed that everything was business as usual because DCG had stepped in to absorb the losses.”
Barry Silbert has meticulously built a deception, according to the Winklevoss twin. He further clarifies that DCG didn’t incur any losses or provide any genuine money. DCG secretly sent Genesis a phony 10-year promissory note with a nominal 1% interest rate that was only worth a small portion of its advertised $1.2 billion value. Financially, Genesis was in a terrible situation.
To deceive Gemini and creditors, Barry, DCG, and Genesis worked together to create false financial records. According to Cameron, one of these papers incorrectly listed the fake 10-year promissory note as a “Current Asset,” which was a flat-out falsehood and a purposeful misrepresentation of the facts. Winklevoss asserted:
“This fraud goes to the very top. Barry Silbert and other DCG executives were directly involved in these lies and they lied again and again to conceal the truth from Gemini and other creditors.”
The cryptocurrency lender Genesis was in charge of running the Earn program in collaboration with Gemini. But in November 2022, the company stopped withdrawals, citing “unprecedented market turmoil,” and later submitted a Chapter 11 bankruptcy petition.
