Digital Currency Group (DCG) was threatened with legal action by Gemini Earn CEO and Genesis investor Cameron Winklevoss after the latter’s company went into bankruptcy.
Winklevoss argued that filing for bankruptcy would not absolve Barry, DCG, or anyone else involved in the company’s misdeeds from responsibility.
He continued, saying DCG founder Barry Silbert had failed “to provide creditors a fair settlement.”
We are planning to sue Barry and DCG as soon as possible unless they make a reasonable proposal to their creditors.
A $1 billion promissory note from DCG to Genesis was listed as Current Asset, prompting Winklevoss to accuse Genesis, DCG, and Barry Silbert of fraud.
But Silbert believes, “DCG essentially accepted Genesis’ risk of failure on the Three Arrows Capital loan.”
“We look forward to continuing our engagement with DCG and our creditors’ advisers as we attempt to execute a route to maximize value and give the greatest potential for our company to emerge well-positioned for the future,” said Paul Aronzon, an independent director at Genesis.
But its cash flow issues may mean that creditors are fortunate to acquire 10% of the company’s assets.
Furthermore, any legal action taken against Silbert and DCG would likely take two years or more to resolve.
The trust structure of Grayscale Bitcoin Trust (GBTC), which stores 630,000 BTC in Coinbase Custody, typically protects the trust’s assets, even in the case of bankruptcy.
Given that Genesis halted withdrawals in November and their bankruptcy became pretty evident weeks ago, it is not surprising that the crypto market has not responded to this news.
So, this information has likely already been factored into the market, but its formal confirmation might spell the end of the crypto bear market.