Gemini co-founder angrily accuses DCG founder: “Scammer, return the money quickly, or we will officially sue DCG and individual.”

Gemini co-founder accuses DCG founder of scamming and demands return of money or will sue both DCG and individual.

The game is over and I am writing to inform you that your game has ended.

Original author: Cameron Winklevoss

Source: Twitter

On July 4th, Gemini co-founder Cameron Winklevoss published an open letter to DCG founder and CEO Barry Silbert, accusing Barry of delaying the $1.2 billion owed to 230,000 Earn users and using arbitration procedures to deceive creditors. He shamelessly claimed to be the victim. Winklevoss said he had had enough and issued a final warning that if he did not agree, he would sue DCG and him personally on July 7th.

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The full text of the open letter to Barry Silbert is as follows:

Barry, today is the 229th day that Genesis has stopped withdrawals, and it has been 174 days since I last wrote to you. As a reminder, I am writing to you on behalf of 232,000 Earn users who have over $1.2 billion in assets trapped in Genesis, a company owned and controlled by Digital Currency Group (DCG), which is owned and controlled by you.

As you are well aware, DCG has been engaging in fraudulent activities. As its leader, you have nurtured and designed a culture of lies and deception, many of which are well-documented in the public record.

What is shocking is that when I detailed how you, your employees, and DCG conspired to make multiple false and misleading statements to creditors to cover up Genesis’ bankruptcy and financial condition, including forging balance sheets and other documents, you did not directly address or refute any of them.

You did not explain any errors or possible misunderstandings I might have, but completely avoided the issue and responded in the most obscure way, writing a completely ignored and self-centered letter to your shareholders.

On January 10th, you wrote to your shareholders (some of whom are also creditors you have deceived), explaining to them and the world how your feelings have been hurt.

The first complete idea of your nearly 4,000-word letter is, “I have done a lot of reflection on the past year…” This is a good sign. However, despite a hopeful start and all the reflection you claim, you somehow forgot to address the elephant in the room – DCG owes creditors $3.3 billion (including $1.2 billion owed to Earn users).

You have not apologized for the stress, anxiety, and pain you have caused to them and their families. Nor have you apologized for the damage you have caused to our entire industry. However, you did tell everyone that “the past year has been the most difficult year of my life.”

At first glance, your letter seems like a masterclass in lack of self-awareness. After all, it’s a little strange to write a letter but not address the charges that prompted you to write it. However, upon further examination, your letter is another carefully crafted act of foolishness, entirely intended to shift blame, buy time by playing dumb, and try to screw over creditors and Earn users again. Allow me to explain.

After nearly 8 months of communicating with you, your lawyers, and your advisors, one thing has become abundantly clear. You never had any intention of doing the right thing, taking responsibility for the chaos your recklessness and fraud caused to you, your company, and your employees.

Instead, you spent the last 8 months stalling for time so that you could raise money and screw over creditors and Earn users once again. Let me break down your own game for you.

Committing fraud. In June and July 2022, you, DCG, and Genesis deliberately lied to creditors, Earn users, and Gemini to make us all believe that DCG had absorbed the $1.2 billion loss caused by the collapse of Three Arrows Capital (3AC) two months earlier, in May.

In reality, DCG did not absorb these losses but instead signed a fake long-term promissory note to make it look like it did, without sending a penny to Genesis. The deal was not done in good faith. You hoped that no one would notice, but unfortunately, someone named SBF did, committing a bigger fraud and exposing your fraud.

Refusing to repay the promissory note. The correct approach at this point would have been for you and DCG to actually absorb the $1.2 billion loss or to negotiate with creditors to restructure the promissory note’s terms and quantity in a way that was legal, fair, and reasonable for everyone. You chose to do neither. Instead, you pretended to go through a negotiation process to try to strong-arm dumb creditors and have DCG litigate the feasibility of the promissory note for many years to come in court.

Raise funds to repay the $630 million loan. Delay is crucial because it gives you time to solve the obstacle – DCG owes Genesis $630 million. This loan is like the sword of Damocles hanging over your head. Unlike the FuGazi bills that expire after 10 years, this loan is due in May of this year. If you fail to pay off the loan, DCG will default and go bankrupt.

Therefore, since November, you have been working frantically, not to compensate the creditors, but to raise funds so that you can repay the loan and be free and clear to litigate the FuGazi bills for the next ten years. You haven’t given up and you’re pushing for a better deal no matter what. To you, Earn users are not people, they are just numbers on a spreadsheet, business as usual, bro.

Abuse of mediation procedures. By May 1st, DCG was short of $630 million and about to fall off a cliff. Facing your second default and second bankruptcy in less than six months, you sought to buy time through mediation, and the creditors reluctantly agreed to give you one last chance.

Mediation can be a very effective mechanism, as long as they operate properly, with clear structures, strict deadlines, and real consequences.

Eight weeks later, after several extensions, no agreement has been reached. Why? Because mediation gave DCG an indefinite deferral of payment of its $630 million to Genesis, and it was free. This gratuitous deferral payment severely harmed creditors and Earn users in two very important ways.

First, it denied the creditors, including the Earn users, the $630 million that was owed to them in May. Second, it completely undermined the key bargaining chip of the creditors and Earn users, which was to bring you to the negotiating table to compensate for the forged acceptance bills and avoid protracted scorched-earth litigation.

The game is over, and I’m writing to let you know that your game is over.

In addition to delaying the resolution, the related costs exceeded $100 million, all of which went to lawyers and consultants, sacrificing the interests of creditors and earners, which is already enough.

For this reason, we attach a best and final proposal, which is fair and reasonable to everyone, and represents the minimum that the creditors asked to support the transaction will accept.

If you do not agree to the transaction before 4:00 pm Eastern Time on July 6, we will take the following steps:

Bring a lawsuit against DCG and you personally: The lawsuit will be filed on July 7. Among other things, it will outline your personal responsibility for concealing Genesis bankruptcy and provide a blueprint for 232,000 Earn users to file similar lawsuits against you and DCG.

Propose a turnover motion: We will ask the Genesis special committee to fulfill its fiduciary duty and submit a turnover motion on or before July 7, placing DCG in default and requiring immediate payment of the $630 million owed to creditors and Earn users, with no further delay.

Advance the non-consensual plan: We will work with the Genesis special committee to advance a non-negotiated plan that adheres to a strict timeline and provides for immediate allocation to creditors and Earn users, with DCG’s contribution subject to legal action.

UCC litigation: We will ask the Unsecured Creditors Committee (UCC) to fulfill its fiduciary duty, bring litigation and conduct discovery on the various inter-company loans and transactions between DCG and Genesis entities.

Gemini looks forward to working with the Genesis special committee to end the mediation process, advance the bankruptcy process, and bring relief to Earn users as soon as possible.

Finally, over the past nine months, I have seen a lot of bad behavior from you and your colleagues, but the most disturbing thing was what you said to me this fall, that you are the victim of all of this.

It takes a special kind of “person” to owe 3.3 billion dollars to hundreds of thousands of people and believe or at least pretend to believe that they are the victim, even an idiot doesn’t have the delusion to do so. Finally, he at least recognizes how his behavior has hurt others and tries to make things right. I can confidently say on behalf of all Earn users that it’s time for you to do the right thing.

Cameron Winklevoss.

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