Following a lot of legal back-and-forth jabber, the Winklevoss Twins of the Gemini exchange in New York are moving forward with their lawsuit against Barry Silbert and his company Digital Currency Group. The Twins allege that the firm and its CEO Silbert engaged in massive fraud.
The Winklevoss Twins Are Taking DCG to Court
The problems stem from a program introduced by Gemini called Earn, which allowed users to loan their assets to Genesis, a division of the Digital Currency Group. By loaning their assets, they would earn interest on them, though Genesis later froze all withdrawals following the collapse of FTX last November.
This is alleged to have affected more than 230,000 Earn customers, thus leaving $1.2 billion of crypto stuck in the Genesis platform. Not long after, Genesis filed for bankruptcy. The lawsuit states:
The assets involved, bitcoin and other cryptocurrencies, are relatively novel, but the fraud and deception committed by defendants are all too familiar. Defendants DCG and Silbert engaged in a fraudulent scheme to induce a variety of depositors, including Gemini users for whom Gemini acted as custodian and agent, to continue to lend huge amounts of cryptocurrency and U.S. dollars to DCG’s subsidiary Genesis Global Capital. This lawsuit seeks to recover from defendants the damages and losses that Gemini has incurred [due to] DCG’s and Silbert’s false, misleading, and incomplete representations and omissions to Gemini, and defendants’ role in encouraging and facilitating Genesis’ fraud against Gemini.
Digital Currency Group is denying it did anything wrong and trying to shift the blame onto the Winklevoss brothers, claiming in a statement:
This is yet another publicity stunt from Cameron Winklevoss and Gemini. Any suggestion of wrongdoing by DCG or any of its employees is baseless, defamatory, and false. From day one, Genesis has remained committed to reaching an amicable solution for all parties to the Genesis bankruptcy… The mediation process is nearing a close, and we expect to bring the Genesis Chapter 11 bankruptcy case to a conclusion soon.
Right now, both Genesis and Gemini are facing charges from the SEC. Even before these charges came, Cameron Winklevoss believed the Digital Currency Group and Silbert were to blame for many of the problems his exchange was enduring. He stated:
There is no path forward [so] 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.
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Representatives of Digital Currency Group, however, were quick to dismiss his words as part of a “publicity stunt.”
This isn’t the first time the Winklevoss Twins have engaged in a lawsuit against another party, as their suit against Facebook founder Mark Zuckerberg was the subject of the 2010 Oscar-winning film “The Social Network.”