Gemini and Genesis’ legal troubles stand to shake up industry further
With investor confidence seemingly at an all-time low thanks to the recent slew of insolvencies, a new saga seems to be now unfolding in real time. This one involves crypto exchange Gemini’s Winklevoss twins and Barry Silbert, CEO of Digital Currency Group (DCG) — the parent firm behind crypto market maker and lender Genesis.
On Jan. 2, Cameron Winklevoss posted an open letter to Barry Silbert reminding him of the fact that it had been “47 days since Genesis halted withdrawals” while also providing a blunt, seemingly confrontational assessment of DCG’s existing business practices:
The letter further indicated that the aforementioned sum was lent to Genesis as part of Gemini’s Earn program, an offering enabling customers to earn up to 7.4% annual percentage yield on cryptocurrencies. Cameron then issued another tweet requesting Silbert “publicly commit” to solving the problem by Jan. 8 — a request seemingly ignored by him, at least on Twitter.
Genesis’ ongoing woes stem from the fact that a significant portion of its funds (estimated to be worth $175 million) have been locked in an FTX trading account. Following the collapse of the once second-largest crypto exchange late last year, the company had to halt withdrawals on Nov. 16, even reportedly hiring the consultation services of investment bank Moelis & Company just a week later to get itself out of this pickle.
In a Dec. 7 letter, Derar Islim, the interim CEO of Genesis, told clients that “it will take additional weeks rather than days for us to arrive at a path forward.” In response, Winklevoss and company hired investment bank Houlihan Lokey to devise a framework with which they could “resolve its liquidity issues” keeping them from repaying members of Gemini’s Earn
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