Cameron Winklevoss, president and co-founder of Gemini
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Cameron Winklevoss took Digital Currency Group to task on Friday for its attempt to separate itself from former subsidiary Genesis Global Capital, which is operating under bankruptcy court protection after a liquidity crisis scuttled a lending program last year.
Winklevoss, who with his twin, Tyler, runs the Gemini cryptocurrency exchange, posted on X (formerly Twitter) that “carefully crafted statements” filed on behalf of DCG and CEO Barry Silbert in Manhattan federal court Thursday in a motion to have the case dismissed were “incredibly revealing.”
As an example, Winklevoss wrote, DCG and Silbert “claim they ‘had virtually nothing to do with the Gemini Earn program.’ This is a direct admission that they did in fact have something to do with the Gemini Earn program. Lol.
“They also claim that they ‘owed no duty to Gemini to correct the allegedly false misstatements of [Genesis].’ You’ve got to be kidding me. When a company you own says you wrote a $1.1 billion dollar check that you know you didn’t write, yes, you have a duty to correct this. Sorry, but this doesn’t even pass the giggle test.”
Gemini’s suit against DCG alleged that the company, whose remaining properties include the Grayscale asset management company, and Silbert “caused Genesis to issue a series of financial statements” that showed “DCG had infused $1.1 billion into Genesis as a near-term receivable that would allow Genesis to honor its obligations to depositors.”
Lawyers for DCG and Silbert said in the Thursday filing that Gemini had failed to adequately allege fraud and accused the company and the Winklevoss twins of engaging in a “character assassination campaign” against their clients.
The conflict stems from Gemini’s partnership with Genesis Global Capital, formerly DCG’s lending unit, through which Gemini offered users yields as high as 8% via its lending product Gemini Earn.
Investors have been unable to withdraw the funds since November, when Gemini halted the program after Genesis said it no longer had sufficient liquid assets to meet withdrawals. When Genesis filed for bankruptcy in January, Gemini topped its list of creditors with claims worth $766 million.
Cameron Winklevoss tweeted a proposal described as Gemini’s “best and final offer” on July 3. The plan would require Digital Currency Group to provide almost $1.5 billion—$275 million in cash and $1.19 billion in debt denominated is dollars, bitcoin and ether. On July 7, Gemini filed its lawsuit against DCG and Silbert claiming that damages and losses were incurred “as a direct result of DCG’s and Silbert’s false, misleading, and incomplete representations and omissions to Gemini.”
In the motion to dismiss the case, DCG and Silbert’s lawyers claimed “they had virtually nothing to do with the Gemini Earn program” and appealed to the law prohibiting plaintiffs from equating subsidiaries with their parents. They also called Gemini’s complaint “a hodgepodge of conclusory allegations,” adding that they should have been filed in Genesis’ bankruptcy case.
While they are battling each other, Gemini and Genesis are both defendants in a U.S. Securities and Exchange Commission suit filed in January The agency alleged that the Earn program was a series of investment contracts that should have been registered as securities. The companies filed to dismiss the suit in May.