Key points to remember
- Digital Currency Group brought old problems back into the new year.
- Gemini co-founder Cameron Winklevoss has released an open letter criticizing the actions of DCG CEO Barry Silbert regarding Genesis’ liquidity crisis.
- Grayscale’s Ethereum Trust is also trading at a record -60% discount.
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Barry Silbert’s woes continue as Cameron Winklevoss ups the ante, Gemini Earn clients seek class-action arbitration, and Grayscale’s Ethereum Trust trades at its lowest discount ever.
New year, same problems
Digital Currency Group and its subsidiaries are still suffering from liquidity issues related to FTX.
Yesterday Gemini co-founder Cameron Winklevoss published an open letter on Twitter in which he accused DCG founder Barry Silbert of “engaging in bad faith stall tactics” in regards to Genesis’ current liquidity issue.
Genesis is a crypto credit company and a subsidiary of Digital Currency Group. The company redemptions suspended and new loans on November 16, citing “unprecedented market turbulence” due to the collapse of FTX. As a result, Gemini was forced to shut down its Earn program, which relied on Genesis to provide loan services to Gemini customers.
Winklevoss claimed that Silbert had hidden “behind lawyers, investment bankers and processes” for the past six weeks to avoid meeting face to face with Gemini chiefs. According to Winklevoss, Genesis owes approximately $900 million to Gemini customers, while DCG itself owes Genesis $1.675 billion. Silvbert fired back with a tweet affirming that DCG had not borrowed $1.675 billion from Genesis, and that the company had delivered a relevant proposal on December 29 to Gemini and Genesis, with no response from Gemini.
Three Gemini Earn users also reportedly filed an application for arbitration of a class action lawsuit against DCG and Genesis, alleging that Genesis violates the Master Agreement between the company and its users by failing to return the digital assets of Gemini Earn customers. A related class action has already been deposit against Gemini.
Meanwhile, Grayscale’s Ethereum Trust (ETHE) hit a record -60% discount, meaning the investment product is trading at 60% less than the value of its underlying assets. Grayscale is another subsidiary of DCG; the discount can be attributed to investors’ pessimistic outlook regarding DCG’s creditworthiness, regarding the crypto market in general, and regarding the approval of the Trust itself as an ETF in the cash.
Disclaimer: At the time of writing this article, the author of this article owned BTC, ETH, and several other cryptocurrencies.
