Professional crypto analyst Ram Ahluwalia offers a pessimistic view on cryptocurrency firm Genesis: “the curtains are closing”. The subsidiary of the Digital Currency Group has been on the agenda for some time with unpaid debts to Gemini.
Cryptocurrency firm “curtains are closing” in Genesis crisis
Alarm bells are ringing for institutional crypto firm Genesis and its parent company Digital Currency Group (DGC). Genesis suspended withdrawals in November following “abnormal withdrawal requests that exceeded our available liquidity.” This incident directly affected crypto exchange Gemini, which uses Genesis for its interest-earning Earn program. Earlier this week, Gemini founder Cameron Winklevoss criticized DCG’s founder and CEO, Barry Silbert.
Earn Update: An Open Letter to @BarrySilbert pic.twitter.com/kouAviTho4
— Cameron Winklevoss (@cameron) January 2, 2023
Gemini claims Genesis owes them approximately $1.675 billion, but Genesis disputes this. In a Twitter thread this morning, crypto analyst Ram Ahluwalia beats DCG, Genesis, and Grayscale, saying that “the curtain on the once iconic DCG may be closing.” Ahluwalia explains that crypto bankruptcies forced Genesis to take out a $2.6 billion loan from Alameda in August, noting that this loan was partially covered by client funds when repaying:
Will the courts consider this payment as ‘fake transfer’? If so, the gap in Genesis’ balance sheet from 3AC ($1.5 billion to $2 billion) widens by $2.6 billion. It’s a huge hole.
The deadline for Cameron Winklevoss’s ultimatum has arrived
In a tension where mutual bickering leads to an ultimatum, Ahluwalia says that while Winklevoss doesn’t accuse DCG of fraud, she walks straight to the line:
Cameron accuses Barry of ‘mixing money’ and self-interest. What other 3-letter entities had ‘mixed funds’, loans to itself on non-market terms, and self-trading?
5/ Cameron is not accusing DCG of fraud.
He is coming right up to the line but not crossing it.
Cameron aaccuses Barry of ‘commingled funds’ and self-dealing.
What other 3-letter entity also had ‘commingled funds’, loans to itself on off-market terms, and self-dealing? pic.twitter.com/289pHpJRug
— Ram Ahluwalia, crypto CFA (@ramahluwalia) January 6, 2023
Gemini is unable to take legal action, but Cameron Winklevoss pointed to the deadline, which is January 8th. As analyst Ahluwalia points out:
As an investor, I cannot understand why a venture capitalist would assign any positive equity value to DCG. How much do you have to pay to buy DCG? Stuck on the $2 billion hook for claims and other buybacks? You have $1.1 billion in instantly callable loans if Genesis goes… If Genesis goes over the cliff, it drags DCG with it.
15/ As an investor, I can’t see how a VC would assign any positive equity value to DCG.
How much would you have to be paid to buy DCG?
You are on the hook for $2 Bn in claims and other clawbacks? You have $1.1 Bn loan callable instantly if Genesis goes.
And $575 MM due May
— Ram Ahluwalia, crypto CFA (@ramahluwalia) January 6, 2023
Meanwhile, crypto investors have sued the exchange and its founders for their deposits stuck in the Gemini Earn program. Reports suggest an estimated Genesis has given Gemini customers up to $900 million. Also, today was the date of the ultimatum that Cameron Winklevoss gave to Digital Currency Group CEO Barry Silbert. We will pass on the details.
