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Barry Silbert Addresses Allegations in DCG and 3AC Controversy

Barry Silbert clarifies Digital Currency Group's involvement with Three Arrows Capital and addresses financial allegations by Gemini CEO.
Published on 2023-01-11

DCG's Relationship with 3AC and Genesis

Barry Silbert, CEO of Digital Currency Group (DCG), recently clarified the company's connections with Three Arrows Capital (3AC) and its subsidiary, Genesis Global Capital. Silbert emphasized that DCG owes Genesis $447.5 million and 4,550 BTC, amounting to $78 million. He stressed that DCG never coordinated investments with 3AC, asserting that any trading relationship was solely between Genesis and the now-bankrupt hedge fund.

Allegations from Gemini CEO

The conflict intensified when Gemini CEO Cameron Winklevoss accused DCG and Silbert of poor decision-making concerning 3AC. Winklevoss claimed that Genesis loaned $2.36 billion to 3AC, resulting in a substantial loss of over $1.2 billion when the funds were liquidated. He criticized Silbert for failing to address the financial gap, either through restructuring or filling the deficit.

Financial Speculations and Responses

Silbert responded to the allegations by describing them as misleading. He confirmed that the debts owed to Genesis are due in May 2023, under market interest rates. Silbert also clarified that DCG did not engage in coordinated investment activities with 3AC, highlighting Genesis’s independent trading relationship with the hedge fund.

Measures Taken by DCG

In response to 3AC's loan default, DCG introduced a $1.1 billion promissory note maturing in 2032, replacing Genesis's unsecured loans with 3AC. This measure aims to support Genesis and prevent further market disruption. Silbert noted that DCG did not receive any payment for the note, sharing in the subsidiary's losses.

Regulatory Investigations

Amidst these controversies, DCG is under investigation by the U.S. Securities and Exchange Commission (SEC) and the Department of Justice regarding suspicious internal transfers. This development adds another layer to the ongoing tensions between DCG, Genesis, and Gemini.

The unfolding events highlight the complexities of cryptocurrency investments and the potential financial implications for stakeholders involved.

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