Crypto Biz: DCG’s ‘carefully crafted campaign of lies’?
The monumental collapse of FTX didn’t just destroy a crypto exchange and wipe out billions in customer deposits — it also exposed accounting irregularities at Barry Silbert’s empire, the Digital Currency Group, or DCG. That’s according to Bitcoin (BTC) billionaire and Gemini co-founder Cameron Winklevoss. The FTX blow-up caused Genesis Global Trading, another DCG firm, to pause new loan originations and redemptions — a decision that directly affected Winklevoss’ Gemini Earn program. The pause on withdrawals has been active for nearly two months, prompting Winklevoss to pen two open letters addressed to Silbert and DCG’s board. The second open letter, published this week, claimed that Silbert was “unfit” to run DCG and that there would be no way forward with him at the helm.
In a follow-up to last week’s Crypto Biz newsletter, this week’s agenda again focuses on the dispute between Winklevoss and Silbert. We also chronicle Coinbase’s latest layoffs and the status of Voyager’s sale to Binance.US.
In a four-page letter addressed to DCG’s board, Winklevoss claimed that Silbert, DCG and Genesis orchestrated “a carefully crafted campaign of lies” to hide a $1.2 billion hole in Genesis’ balance sheet following the collapse of Three Arrows Capital (3AC). Once 3AC went belly-up, Silbert had two options: restructure the Genesis loan book, or fill the hole. According to Winklevoss, Silbert did neither and pretended to inject new funds into the lending firm. Winklevoss also alleged there were “recursive trades” between 3AC and the Grayscale Bitcoin Trust (GBTC), which effectively amounted to “swap transactions” of Bitcoin for GBTC by Genesis. “These misrepresentations [...] were a sleight of hand designed to make it appear as if
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