Winklevoss' Unfulfilled Merger Plans with DCG and GGC Revealed Amid Fraud Lawsuit
Summary:
Gemini's co-founder Cameron Winklevoss once considered a merger with Digital Currency Group (DCG) and Genesis Global Capital (GGC) to create a publicly traded crypto giant rivaling Coinbase and FTX. This was revealed in a leaked email from DCG's CEO Barry Silbert after Genesis filed for bankruptcy. The email was subsequently used in a $3 billion fraud lawsuit filed by New York's Attorney General against DCG and Silbert. Despite the potential of a financially robust merger, the plan fell through. Following this, Genesis faced bankruptcy, owing $1.2 billion to 232,000 Gemini Earn customers, leading to Winklevoss threatening legal action against Silbert.
Co-founder of Gemini, Cameron Winklevoss, once contemplated a union between Digital Currency Group (DCG) and Genesis Global Capital (GGC) - a crypto lending entity. The idea was this union would lead to a publicly traded powerhouse capable of facing rivals such as Coinbase and FTX. This proposition was revealed by DCG’s CEO, Barry Silbert, in an email leaked from October 2022 after having shared lunch with Winklevoss - the incident occurred three months prior to Genesis declaring bankruptcy. The email became a focal element in a motion to dismiss a $3 billion fraud lawsuit issued by New York's Attorney General against DCG and Barry Silbert on March 6. The intent was to challenge the allegations that Silbert was aware of Genesis's financial troubles yet intended to conceal it from associates. Lawyers argued that Silbert's conduct demonstrated the contrary.
Silbert communicated in the email, "Cameron is considering a stronger alliance between Genesis/Gemini/DCG, possibly involving the merging of the companies." He labelled the potential merger as "highly appealing to investors", predicting this alliance could generate $1 billion, further leading to a public listing within two years. Silbert conveyed to Winklevoss his belief that a combination of Gemini and Genesis would transform into a resilient force, competing with Coinbase and FTX. He also expressed that Gemini could elevate to the status of the world's largest cryptocurrency custody provider.
During the luncheon, the two companies were engaged in a cross-platform lending agreement for 18 months. GGC was exposed to losses of "hundreds of millions" due to overexposure to the failed Three Arrows Capital. Silbert claimed he candidly discussed GGC's financial crisis with Winklevoss, who reportedly received this information well. Silbert urged his team that Genesis should undertake all necessary actions to avoid a run on the bank or it would be an arduous task for the firm to find alternate liquidity. Silbert noted, “I cannot fundraise for DCG if Genesis bankruptcy is at stake. Hence, action needs to be taken to prevent things from getting worse.”
Silbert expected Winklevoss to discuss this matter with his twin, Tyler Winklevoss and then determine an appropriate course of action. However, plans for the merger fell through.
Gemini launched its "Earn" scheme in February 2021, enabling its customers to lend their coins to GGC for interest. Nonetheless, this venture reached a point of no return when GGC stopped withdrawals a month after the email, including those from Gemini’s Earn. This action was attributed to "unmatched market volatility" following the unexpected collapse of FTX. By January 2023, GGC went bankrupt, owing $1.2 billion to 232,000 Gemini Earn customers.
Winklevoss has since made multiple threats to sue Silbert and accused him of partaking in "fraudulent actions" through a "wave of lies and deception".
Published At
3/8/2024 4:25:40 AM
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