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Winklevii Give Barry Final Notice
Fed up with Silbert's delay tactics, the Winklevoss twins have thrown down the gauntlet.
Cameron Winklevoss, founder and CEO of US crypto exchange Gemini, has thrown down the gauntlet at Barry Silbert's feet on behalf of 230,000 Earn customers who lost money when Genesis filed for bankruptcy.
Gemini's Earn program offered depositors the opportunity to earn returns of up to 8%, with DCG's trading arm, Genesis, serving as the lending entity behind it. However, Genesis incurred huge losses from the collapse of 3AC, FTX, and other bad trades exposed by the 2022 bear market. On November 16, 2022—a few days before BTC put in its cycle low—Genesis made the decision to "temporarily" halt withdrawals, citing "unprecedented market turmoil."
Genesis's Bankruptcy, Gemini's Problem
On January 19, 2023, Genesis filed for bankruptcy, leaving Gemini in the dark about the $1.2 billion Genesis owed to its customers. DCG, meanwhile, took on a large amount of Genesis's debt with a "promissory note" that the Winkelvoss twins have claimed is an accounting sleight-of-hand that isn't worth the paper it's written on.
Cameron doesn't mince his words about Barry's personal shortcomings and failures as a business leader, and tells him his time is up. Gemini are giving Silbert just two more days to either agree to the terms laid out in a "Best and Final Offer" proposal, or to face a lawsuit.
The offers states that DCG should make a $275 million payment by July 21 this year, another $355 million before July 21, 2025, and $835 million by July 21, 2028—a total of $1.465 billion. Payments will be in BTC, ETH, and USD, with the price of BTC and ETH capped at $100,000 and $10,000 respectively (presumably to avoid increasing prices resulting in a lower payout, in crypto terms).
Delays And Bad Faith
The letter accuses Silbert of engaging with mediation in bad faith and using it to delay a resolution; of lying to Earn customers and Genesis shareholders; committing fraud; and forcing Gemini to rack up over $100 million in legal fees at the expense of creditors and Earn users. "Enough is enough."
Should Silbert not agree to the deal on offer by 4pm ET, July 6, Gemini will:
- File a lawsuit against DCG and Silbert personally, outlining his personal liability in hiding Genesis's insolvency.
- File a turnover motion designed to put DCG into default, demanding immediate repayment of $630 million to Earn users.
- Advance a non-consensual plan for a repayment schedule.
- Take further legal action that will dig into the intercompany loans between Genesis and DCG.
The final paragraph draws attention to flaws in Silbert's character, criticizing the way he claimed to be a victim when he owes a total of $3.3 billion to hundreds of thousands of people. The letter closes with Cameron comparing Silbert to Sam Bankman-Fried—unfavorably, since "he at least recognized how his actions had hurt others".
The ball is now firmly in Barry's court.
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