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Gemini escalates battle with billionaire Barry Silbert, terminates its ‘Earn’ product

Cameron Winklevoss, president and co-founder of crypto exchange Gemini, right, speaks as Tyler Winklevoss, chief executive officer and co-founder of Gemini, listens during a Bloomberg Television interview in New York, U.S., on Tuesday, Dec. 12, 2017.
Christopher Goodney—Bloomberg via Getty Images

Gemini, the crypto exchange founded by Cameron and Tyler Winklevoss, ramped up the pressure in its dispute with Digital Currency Group’s Genesis Global Trading, which it claims owes the company nearly $1 billion.

Gemini first partnered with Genesis starting in 2021 when it launched its Gemini Earn product, which promised customers yields of about 8%. The product involved customers lending crypto to Genesis, which loaned the money to institutional investors.

But after FTX collapsed last November, Genesis put the brakes on customer redemptions, meaning Gemini didn’t have the funds to pay its Earn customers. In an open letter published Jan. 2 cofounder Cameron Winklevoss claimed Genesis owed it $900 million to repay some 340,000 customers who participated in its yield-bearing product.

This week, Gemini escalated the conflict by shutting down the Earn program on Jan. 8, according to a court filing. It also dissolved the master loan agreement put in place between its customers and Genesis, according to CoinDesk. It said in an email to Gemini Earn customers this week that ending the agreement now requires Genesis to return all outstanding assets, CoinDesk reported.

Gemini ended its Earn program on Jan. 8, which was the original deadline Winklevoss gave Digital Currency Group and Genesis to resolve their issues.

After Winklevoss was brushed off by Digital Currency Group CEO Barry Silbert following his first letter, he sent a follow-up letter on Jan. 10 demanding that DCG’s board remove Silbert as CEO.

For his part, Silbert, who has been involved in the crypto industry for a decade, said in a letter to DCG shareholders on Tuesday that 2022 was the hardest year of his life “both personally and professionally.”

“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,” he wrote.

As he faces calls to resign and Winklevoss’s claims of dubious accounting tricks, Silbert reminisced in his letter on “fond memories of the early days of our industry, working hard to help educate and fighting in the trenches with fellow entrepreneurs and investors to gain legitimacy.”

In the new year, he said he was committed to building “a stronger company.”

“Looking ahead to 2023 and beyond, the industry has a lot of hard work to do to re-establish its credibility and reputation, which have been all but destroyed by a wave of unprecedented fraud and criminal behavior unlike anything I’ve seen in my career,” he wrote.

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