Former business partners turned bitter enemies Cameron Winklevoss and Barry Silbert have continued their very public spat, having suffered a US$900mln fallout in recent weeks.
Winklevoss, who co-founded cryptocurrency exchange Gemini with his brother Tyler – played by Armie Hammer in 2010 Facebook (NASDAQ:META) thriller The Social Network, accuses Barry Gilbert, chief executive of Digital Currency Group (DGC), of causing massive financial harm to Gemini customers.
Conflict first arose when Gemini initially partnered with Genesis, a subsidiary of DCG, for the former’s Earn programme, which gave retail investors the opportunity to earn yield by lending their digital assets to borrowers.
When the FTX collapse set off a crisis in the crypto markets, Genesis was left without sufficient liquidity to honour Gemini customers’ redemption requests, purportedly totalling US$900mln.
As is typical with public spats these days, the tussle played out on the ‘global town square’, to use Elon Musk’s parlance, that is Twitter.
On 2 January, Winklevoss tweeted an open letter to Gilbert accusing him of withholding nearly US$1.7bn in cash owed to Genesis.
“You took this money – the money of schoolteachers – to fuel greedy share buybacks, illiquid venture investments, and kamikaze Grayscale NAV (net asset value) trades… all at the expense of creditors all for your own personal gain,” went the letter.
“This mess is entirely of your own making,” continued the missive. “The idea in your head that you can quietly hide in your ivory tower and that this will all just magically go away, or that this is someone else’s problem, is pure fantasy."
Replying to the tweet, Silbert said that DGC “did not borrow” US$1.7bn from Genesis, adding that DCG’s next loan maturity is due in May 2023.
Winklevoss volleyed back: “There you go again. Stop trying to pretend that you and DCG are innocent bystanders and had nothing to do with creating this mess. It's completely disingenuous.”
Winklevoss ramps up the accusations
Now Winklevoss has turned up the heat by calling on shareholders to give Silbert the boot.
According to a freshly tweeted letter penned by Winklevoss, Silbert, DCG and Genesis embarked on a campaign of lies to make people believe that DCG had injected US$1.2bn into Genesis when in reality it had not.
Winklevoss contended that this was done through a mixture of public and private lies and accounting fraud.
Earn Update: An Open Letter to the Board of @DCGco pic.twitter.com/eakuFjDZR2— Cameron Winklevoss (@cameron) January 10, 2023
Before signing off, Winklevoss called for Silbert’s resignation.
“There is no path forward as long as Barry Silbert remains CEO of DCG. He has proven himself unfit to run DCG and unwilling and unable to find a resolution with creditors that is both fair and reasonable.
“As a result, Gemini, acting on behalf of 340,000 Earn users, requests that the board remove Barry Silbert as CEO, effective immediately, and install a new CEO, who will right the wrongs that occurred under Barry’s watch.
“Genesis lenders, including Earn users, have been seriously harmed and deserve
a resolution for the recovery of their assets. I am confident that with new management at DCG, we can all work together to achieve a positive, out-of-court solution that will provide a win-win outcome for all, including DCG shareholders.”
Silbert has yet to respond to the open letter directly, but in a 10 January note to shareholders, he alluded to the allegations against him.
“Bad actors and repeated blow-ups have wreaked havoc on our industry, with ripple effects extending far and wide," he said, continuing: “Although DCG, our subsidiaries, and many of our portfolio companies are not immune to the effects of the present turmoil, it has been challenging to have my integrity and good intentions questioned after spending a decade pouring everything into this company and the space with an unrelenting focus on doing things the right way."