There’s a new twist in the bitter feud between crypto baron Barry Silbert and the Winklevoss twins. The sides have been beefing over how to help more than 300,000 Gemini Earn customers who have had their funds frozen since January. Now, Silbert’s conglomerate DCG claims those customers will get back 95% to 110% of their funds if enough people sign on to its plan.
The background to all this is complicated, but the short version is that the Winkelvoss twins operated Gemini Earn, a platform where users could earn up to 9% lending their crypto. Things were going fine until Genesis, a DCG subsidiary that provided financing to Gemini Earn, filed for bankruptcy, leaving customers high and dry. The Winklevii blame Silbert for this mess, claiming Genesis went under because of sweetheart loan deals that it made to its parent company.
The bankruptcy resulted in Genesis owing over $3 billion to unsecured creditors, including Gemini Earn customers who had around $1.1 billion in total funds on the platform. In order for those customers to get their money back, two-thirds of the creditors—who also include hedge funds and family offices—representing two-thirds of the money at stake must vote to approve a plan to resolve the bankruptcy.
DCG and Genesis have come up with various plans to resolve the matter, but the Winklevoss twins have held out while publicly taunting Silbert over what they say are his sleazy business practices. Meanwhile, the twins have been running a campaign urging Gemini Earn customers to reject the proposals—presumably because they want Silbert to cough up more money.
That appears to be what happened with the latest bankruptcy proposal, which is a pretty sweet deal for Gemini Earn customers if the 95% to 110% figure holds up. By contrast, creditors recover an average of 48.5% in a typical Chapter 11 case, according to this week’s DCG proposal.
DCG’s Silbert is no doubt eager to make the legal mess go away, especially at a time when the SEC and, according to some reports, the Justice Department are looking into his corporate operations. And while the Winklevoss twins appear determined to squeeze Silbert to the max, it will be hard for them to drag this out much longer if their antics are all that stand in the way of thousands of retail customers getting their money back.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
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A federal judge agreed to let FTX sell off more than $3.1 billion of the estate's crypto assets, in part to hedge against fluctuating prices. (WSJ)
Telegram has integrated a crypto wallet tied to the TON blockchain into its messaging app, and plans to roll out the feature to customers by November. (The Block)
Bitcoin has sustained a modest bounceback, trading over $26,000 for all of Wednesday. (CoinDesk)
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