You are currently viewing Winklevoss twins sue crypto investor DCG after dispute over restructuring

Winklevoss twins sue crypto investor DCG after dispute over restructuring

[ad_1]

Receive free Cryptocurrencies updates

Billionaire twins Tyler and Cameron Winklevoss have sued SoftBank-backed crypto company Digital Currency Group and its chief executive Barry Silbert, alleging that they engaged in “fraud” to trick investors.

The lawsuit, filed in a New York court on Friday, ramps up a months-long dispute between the former Olympic rowers and DCG as both sides try to contain the fallout from the collapse of cryptocurrency exchange FTX.

DCG’s cryptocurrency broker Genesis was forced to put its lending unit into Chapter 11 bankruptcy earlier this year following the implosion of FTX, trapping investors’ funds.

DCG’s Genesis was one of the biggest lenders in the crypto market, allowing customers to lend out their coins in return for high yields. Genesis owes its creditors more than $3bn, with $766mn owed to the retail customers of the Winklevoss’s Gemini exchange, according to bankruptcy filings.

DCG, Genesis and Gemini have been in mediation through bankruptcy court for months, but the Winklevoss twins have grown increasingly strident in their criticism of Silbert and his crypto companies.

At the heart of Gemini’s allegations against DCG and Silbert is a $1.2bn promissory note, which they claim was misrepresented to creditors in order to cover up DCG and Genesis’ financial positions. “This lawsuit is about fraud,” the documents said.

It alleged that DCG and Silbert “engaged in a fraudulent scheme” to induce Gemini’s customers “to continue to lend huge amounts of cryptocurrency and US dollars” to Genesis, by touting “purportedly robust risk-management practices and a supposedly thorough vetting process” of who the assets were lent to. “Those were lies,” the lawsuit claims. 

Gemini and Genesis had engaged in a crypto-lending programme called Earn, where retail investors would place their funds with Gemini which would lend them to Genesis, which would in turn lend the tokens out to other companies. The bankruptcy of Genesis has affected 340,000 of Gemini’s retail investors, whose funds remain trapped, as well as thousands of other investors whose coins were lent to the broker.

With backing from SoftBank, Singapore’s sovereign wealth fund GIC and Google’s CapitalG, DCG has grown into one of the crypto market’s biggest venture portfolios. The Connecticut-based group, valued at $10bn in 2021, owns firms including asset manager Grayscale and trade news site CoinDesk.

“Any suggestion of wrongdoing by DCG or any of its employees is baseless, defamatory and completely false,” DCG said in response. “The mediation process is nearing a close and we expect to bring the Genesis Chapter 11 case to a conclusion soon,” it added.

In January, the US Securities and Exchange Commission dealt a further blow to both companies by suing Gemini and Genesis, charging that their crypto-lending programme was not registered properly as a securities offering. 

[ad_2]

Source link

Leave a Reply