Gemini loaned customer funds to the earn lending product offered by Silbert’s Genesis brokerage. Gemini Earn users have been affected by Genesis Global Capital’s decision to block redemptions due to the FTX contagion; as a result, Gemini is trying to collaborate with Genesis in order to retrieve customer assets.
The head of the cryptocurrency conglomerate Digital Currency Group has been accused of engaging in “bad faith” tactics by the co-founder and president of the digital currency exchange Gemini, Cameron Winklevoss.
Winklevoss wrote an open letter to Digital Currency Group CEO Barry Silbert on Monday, accusing Silbert of repeatedly declining to meet with the Gemini team to find a solution to the liquidity problem that Gemini Earn clients are currently experiencing.
Additionally, Winklevoss asserted that Silbert had taken out a $1.67 billion loan from his own Genesis company to fund share buybacks, venture capital investments, and “kamikaze Grayscale Net Asset Value trades” that increased the value of the assets Silbert was managing.
Silbert responded by disputing Winklevoss’s accusations on Twitter:
Winklevoss responded to Silbert’s claim in a subsequent tweet by calling it “totally disingenuous” and challenging Silbert to clarify how DCG would still owe Genesis US$1.675 billion if it had not borrowed the money. As of the time of writing, Silbert has not replied.
In spite of the heated discussion, Winklevoss stated that he hopes to find a solution to the liquidity crisis by the 8th of January.
It is only the first week of the year 2023 and problems are beginning to emerge. It is possible that Gemini may pressure Genesis Trading to file for Chapter 11 bankruptcy very soon. The insolvency of DCG will be precipitated by the liquidation of its assets and the bankruptcy will soon follow. Because of this, the assets held by Grayscale Trust will be subject to a considerable risk of triggering another black swan event, which has the potential to cause the price of Bitcoin to plummet to between $12,000 and $10,000.
Disclaimer: Please take the following statement with a grain of salt and do not base any of your financial decisions on what is written above. Always perform your own due diligence and keep an eye on how these events will play out at the end of the week.
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Rickie Sebastian Sanchez is an article writer specializing in cryptocurrency news. Since late 2017, he has been actively investing in cryptocurrencies. He is enthusiastic about everything that has to do with crypto and he hopes that the readers of his articles in the years to come will gain a massive understanding of blockchain technology.