Digital Currency Group CEO Barry Silbert Responds to Accusations by Gemini’s Cameron Winklevoss With Shareholders Letter

Barry Silbert, CEO of Digital Currency Group (DCG), has released a letter to shareholders in response to a recent open letter from Gemini CEO Cameron Winklevoss. The letter, issued Tuesday by Winklevoss, calls for the DCG board to force Silbert to step down as CEO. Silbert shared his letter on Twitter and said he had been reflecting deeply over the past year on the state of the cryptocurrency industry and its direction.

On Tuesday, Digital Currency Group CEO Barry Silbert wrote a letter to shareholders in response to accusations made by Gemini CEO Cameron Winklevoss. Winklevoss had previously accused DCG of misrepresentation and called for Silbert’s resignation as CEO. Silbert’s letter, which does not directly address some of Winklevoss’ specific allegations, does include a Q&A session that addresses certain matters.

“I’ve been reflecting quite a bit about the past year, the state of the industry, and where things go from here,” Silbert wrote on Twitter sharing his letter.

The shareholder letter starts off by expressing pride in the role that the company and Silbert have played in the past ten years as builders in the blockchain industry. Silbert said that DCG has invested in more than 200 firms and in the early days of the industry, the company faced many difficulties and hurdles. The letter then shifts to discuss the challenges faced by the company in the past year. Silbert said bad actors and repeated blow-ups have wreaked havoc on the industry, and the company has faced difficulties as a result.

“Although DCG, our subsidiaries, and many of our portfolio companies are not immune to the effects of the present turmoil, 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,” Silbert wrote.

The Q&A part of Silbert’s letter goes on to explain how DCG interacts with its wholly-owned subsidiaries and portfolio companies. The letter stresses that DCG subsidiaries are independent companies with their own management teams. The company details that this includes financial and risk management protocols, and legal and compliance oversight. One of the questions asks whether or not DCG and its subsidiaries commingle cash.

“No,” the Q&A part of the letter insists. “Each of DCG’s wholly-owned subsidiaries has its own bank accounts, securities accounts, and crypto accounts, and maintains separate books and records.”

The Q&A part further notes that DCG’s relationship with FTX was a $250K Series B investment in 2021 and an FTX trading account “with less than 1% of all our trading volume transacted on that platform.” “Barry has no personal or professional relationship with Sam Bankman-Fried,” the letter stresses. “Aside from a conversation in the Summer of 2022 and a few emails at the time, Barry does not recall ever meeting, speaking with, or otherwise privately communicating with him.”

The Q&A section of the letter also addresses alleged ties between Digital Currency Group (DCG) and Three Arrows Capital (3AC), the now-defunct cryptocurrency hedge fund. The letter asserts that “DCG has never had a relationship with Three Arrows Capital” and that Barry Silbert, CEO, has never met the 3AC executives. However, Silbert acknowledged that there had been an “introductory call with one of the co-founders in 2020.” Additionally, while Genesis Capital, a subsidiary of DCG, had a trading and lending relationship with 3AC, and 3AC defaulted on its loans from Genesis, DCG stated that it “never coordinated purchases or sales of GBTC or any other investments” with the bankrupt crypto hedge fund.

The letter also addresses the reasons behind DCG’s decision to take on the bankruptcy claim against 3AC and what DCG received in exchange for the $1.1 billion promissory note from Genesis Capital. According to DCG, the recovery is “highly uncertain” and the company “did not receive any cash, cryptocurrency, or other forms of payment for the promissory note – DCG effectively assumed Genesis’ risk of loss on the Three Arrows Capital loan with no obligation to do so,” the company explained in a Q&A section of the letter. Even though it is uncertain what may happen in the near future between DCG and Gemini, Silbert remains optimistic.

Following Silbert’s shareholder letter, Gemini sent out emails to Earn customers, notifying them that the service was officially terminated. “We are writing to let you know that Gemini, acting as agent on your behalf, has terminated the Master Loan Agreement (MLA) between you and Genesis Global Capital, LLC (Genesis), effective as of January 8, 2023,” the email from Gemini said. “This officially terminates the Earn Program and requires Genesis to return all assets outstanding in the program,” according to the email. “Existing redemption requests are not impacted and continue to await fulfillment by Genesis,” Gemini added.

What are your thoughts on the response from Digital Currency Group’s CEO, Barry Silbert, to the accusations from Gemini’s CEO, Cameron Winklevoss? Leave your comments below.