The co-founder of the Gemini cryptocurrency exchange, Cameron Winklevoss, publicly issued an ultimatum to Barry Silbert, the CEO of the Digital Currency Group (DCG), on July 4.
In an open letter, he announced Gemini’s “best and final offer” for debt restructuring, giving Silbert a tight deadline of just two days to respond.
The tiff between Winklevoss and Silbert started nearly eight months ago when DCG holding company Genesis halted withdrawals and subsequently filed for bankruptcy.
According to Winklevoss, Genesis owes $1.2 billion to 232,000 users of the defunct Gemini Earn program. It is worth noting, however, that Genesis’ bankruptcy filing pegged the value of its debt to Gemini Earn users at $765.9 million.
In his final offer for the ongoing debt restructuring negotiations, Winklevoss proposed a total payment plan of $1.465 billion spanning five years. The structured payment plan includes a forbearance payment of $275 million due by July 21, followed by a $355 million payment in 2 years and a final $835 million payment in 5 years. The plan also specifies that the payments should be made as 40% in USD, 40% in Bitcoin (BTC), and the remaining 20% in Ethereum(ETH).
Winklevoss noted in the letter:
“This proposal is fair and reasonable for everyone and represents the floor that creditors, who are required to support a deal, will accept.”
‘Games are over.’
Winklevoss’ ultimatum comes although he claimed Gemini had reached an “agreement in principle” with Genesis in February.
Winklevoss lashed out at Silbert for constantly delaying a resolution on the repayment of Gemini Earn users. Winklevoss, who had called for the dismissal of Silbert as DCG chief in January, reiterated allegations of fraud against the firm and Silbert.
The Gemini co-founder noted that Silbert’s 4000-word letter to shareholders in January was a “piece of carefully crafted stupidity” that shirked all responsibility. Winklevoss claimed Silbert’s letter was another ploy to buy time and play “dumb” to “screw” over Gemini Earn users.
Winklevoss further criticized Silbert, accusing him of delaying and avoiding a consensual resolution with creditors. He wrote,
“Instead, you have dedicated the last 8 months to buying time so you can raise money and stiff creditors and Earn users again,”
Winklevoss again accused DCG and Genesis of lying to creditors and Earn users. In the months after Three Arrows Capital collapsed, DCG assured creditors it had absorbed Genesis’ loss of $1.2 billion. Winklevoss claimed it was a “fraudulent transaction” involving a “bogus long-dated promissory note,” which was exposed with the collapse of FTX in November.
The former Olympic rower further alleged that Silbert has “pretended” to negotiate a deal only to “rope-a-dope creditors.” He claimed that Silbert is using the negotiations to buy time while DCG has litigated the validity of the promissory note for years.
DCG has been scrambling to raise funds over the past several months but, seemingly, to no avail. DCG missed its payment of $630 million to Genesis in May and entered into mediation. However, after eight weeks of mediation, no deal has been reached because the mediation has allowed DCG to delay its repayment indefinitely, Winklevoss claims.
Winklevoss has had enough of DCG’s delaying tactics and shenanigans and declared that the “games are over.”
Legal consequences
If DCG does not accept Gemini’s offer by July 6, Winklevoss has warned of potential legal consequences, a step he has threatened to take in the past as well.
Winklevoss said that if the offer is unaccepted, Gemini will file a lawsuit on July 7 against DCG and Silbert. The suit will outline Silbert’s personal “liability in hiding Genesis’ insolvency,” he noted.
Additionally, Gemini will demand the Genesis Special Committee file a turnover motion on July 7 to force DCG to repay the $630 million it owes immediately. Winklevoss also said that Gemini would work with the committee to advance a “non-consensual” plan with strict deadlines prioritizing immediate repayment to Earn users and other Genesis creditors.
Gemini will also ask the unsecured creditor committee (UCC) to file a lawsuit detailing investigations into the intercompany loans between Genesis and DCG.
In response to the ultimatum, Ram Ahluwalia, CEO of Lumida Wealth Management, suggested that it could be yet another missed deadline for DCG. He believes Silbert has little to gain from Gemini’s plan, which could potentially magnify DCG’s legal liabilities.
“… creditors can’t assess whether Barry is playing hardball or if his back is up against a wall.
The absence of any equity injection, no debt refinancings, and the May missed debt payments suggest the latter.”
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