The co-founder of Gemini and the founder of DCG are constantly in dispute. What are they arguing about?

撰文：Loopy Lu

Recently, Gemini co-founder Cameron Winklevoss issued an open letter to DCG founder and CEO Barry Silbert. And issued an “ultimatum” to Barry Silbert. (Related reading: “Gemini co-founder scolds DCG founder: Uncle Cheng who owes money? If we default again, we will take up legal weapons”)

At present, with the “time limit” of the ultimatum, Barry Silbert has not responded. This protracted “tearing force” drama is still going on…

What are the two sides tearing up in this latest round?

Winklevoss re-introduced DCG’s trade interest on Twitter. "I would like to invite Barry Silbert to a Twitter Space to discuss our best and final offer. No lawyers, no advisors, just friends. I know Earn users would love to hear from you. You can be the first to let them know if you accept this Let me know when you have time.” Winklevoss also lamented DCG’s delay in coming up with a satisfactory plan to repay Genesis creditors (including customers of Gemini’s Earn plan), and so far, DCG has not been able to. $630 million to Genesis.

Winklevoss said that after months of negotiations and mediation, he presented a “final offer” for Genesis’ debt restructuring talks, asking for $1.465 billion in payments and loans denominated in U.S. dollars, bitcoin and ethereum. He had also previously presented a document titled “Best and Final Offer - July 3, 2023”, which outlined a series of plans.

According to the content of the outline, in addition to 1.465 billion US dollars, it also involves three arrows capital, FTX, Alameda and other “bankruptcy sector” brothers and sisters.

Best and Final Bid

Winklevoss said fiercely, "I am writing to inform you that your game is over. In addition to delaying payments, their (referring to Genesis) professional services fees have soared to more than $100 million, all of which have been handed over to lawyers and lawyers. consultants, at the expense of creditors and Earn users.” In a January court filing, Genesis listed more than $3 billion in claims to its top 50 creditors. About $1.2 billion is owed to Earn users, according to Winklevoss.

In the letter, Winklevoss also set a deadline for Barry Silbert. Failure to agree to the deal by 4:00 p.m. ET on July 6 will result in further steps, including four actions:

*Suit filed July 7 against DCG and Barry Silbert personally.

• On the same day, a turnaround motion was filed requiring the Genesis Special Committee to place DCG in default and to make an immediate payment of $630 million.
• Advancement of non-consensual plans, DCG’s contribution will be sued.
• Litigation of UCC litigation, prosecution and discovery in investigation of various intercompany loans and transactions between DCG and Genesis entities.

What happened to Genesis?

Currently, Genesis has stopped withdrawals for more than 230 days. But since its shutdown, Genesis has been unable to negotiate a global, consensus-based solution with its creditors and Earn users.

For a long time, the DCG empire has been a behemoth in the encrypted world, and its business involves many fields in the encrypted world. Barry Silbert founded DCG in 2015. The company owns top-level well-known brands in the industry such as Grayscale, Genesis and Coindesk, and has deployed hundreds of various projects through investment. Among the DCG affiliated companies, of course, the protagonist of this crisis–Genesis.

Winklevoss said that when Three Arrows Capital collapsed, DCG lost about $1.2 billion due to this incident. Barry Silbert has been actively operating since November last year in an attempt to raise funds to settle the bad debt. However, DCG’s financial situation has never been relieved.

At the end of 2022, a rumor instantly detonated the market and became the prelude to this DCG crisis. There are rumors in the market that Genesis may have solvency problems. In order to fill the hole, DCG, the parent company of Genesis, is even considering disbanding GBTC and ETHE issued by another company, Grayscale.

As a star product in the encryption world, GBTC has excellent profitability and brand. When DCG is already planning to disband GBTC, it is not difficult to understand the severity of its crisis. What is even more frightening is that with the intensification of the Genesis crisis, the negative premium of GBTC continues to expand. And DCG, which once leveraged to increase its position in GBTC, made things worse, which is also one of the main reasons for its financial crisis.

Winklevoss No Solution

At present, with the gradual recovery of the market, the currency price has been rising continuously. But Genesis and Gemini, which have gone through financial distress, have been unable to get back the billions of dollars they lost.

The crisis of DCG did not start today. Due to its aggressive risk management and use of high leverage, whether the company can survive the next bull market is debatable.

Recently, a string of established capital tycoons have submitted, renewed or amended applications for Bitcoin ETFs, including BlackRock, Fidelity, WisdomTree, Invesco, Valkryie and ARK Invest. And as the “compliance” storm sweeps the encryption world again, traditional capital has entered the market one after another, how many institutions that are native to the encryption world and “reckless” like Genesis have the ability to compete with traditional institutions in the next bull market? ?

Since the rise of this grand “swearing war”, Winklevoss is still keeping an eye on DCG and continues to fire. Just recently, he also wrote an article accusing that if there is no approved spot bitcoin ETF, American investors will be pushed to “toxic products” like Grayscale GBTC. This product trades at a price well below its net asset value (NAV) and charges “astronomical” management fees.

He made no secret of his fierce criticism of the SEC, “It is a complete disaster for American investors, and the SEC is a failed regulatory agency.”

“Perhaps the SEC will reflect on its dismal track record, rather than trying to overstep its statutory powers. The SEC should act like a gatekeeper to economic activity and focus on fulfilling its mandate to protect investors.”