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President and Co-Founder of Gemini Cameron Winklevoss escalated the ongoing spat with Digital Currency Group CEO and Founder Barry Silbert, accusing Silbert of accounting fraud and demanding that the company\u2019s board install new management. <\/p>\n\n\n\n
Winklevoss shared an open letter to the DCG board via Twitter on Tuesday, claiming that Genesis defrauded 340,000 Gemini Earn users and other creditors of roughly $1.67 billion by making \u201cfalse statements and misrepresentations\u201d regarding Genesis\u2019s financial strength. Notably, Genesis is owned by Silbert’s DCG. <\/p>\n\n\n\n
Bankrupt crypto broker Genesis reportedly cut a $1.2 billion hole in its balance sheet after lending $2.4 billion to crumbled crypto hedge fund Three Arrows Capital (3AC). Winklevoss goes on to accuse Silbert of doing nothing to address his company\u2019s deteriorating books despite having \u201ctwo legitimate options\u201d to either restructure Genesis\u2019s lending structure or fill the $1.2 billion hole left by 3AC\u2019s crash. <\/p>\n\n\n\n
At that point in time, the Genesis loan book was approximately $8 billion, which means that the $1.2 billion loss from 3AC would account for roughly 15% of the loan book\u2019s assets. A restructuring then could have addressed this shortfall to achieve a full recovery of assets for all lenders – including Earn users – in a short amount of time and give them direct access to liquidity. But Barry chose not to do this. He also chose not to fill the $1.2 billion hole. Instead, he pretended to.<\/p><\/blockquote>\n\n\n\n
In addition to allegations of coordinated accounting fraud within Silbert\u2019s mammoth company, Winklevoss also accused former Genesis CEO Michael Moro of making \u201cfalse and misleading\u201d statements. Moro<\/a> claimed that DCG \u201cassumed certain liabilities of Genesis related to 3AC\u201d on July 6, 2022. <\/p>\n\n\n\n
DCG agreed to a $1.1 billion promissory note with Genesis supposedly meant to stabilize the crypto broker. However, Winklevoss called the deal a \u201cgimmick\u201d that failed to address the company\u2019s liquidity crunch. <\/p>\n\n\n\n