Barry Silbert, CEO of Digital Currency Group, previously proposed forming a joint firm with Gemini that could compete with Coinbase and FTX.

Gemini co-founder Cameron Winklevoss previously explored a merger with Digital Currency Group (DCG) and its cryptocurrency lending business Genesis Global Capital (GGC), which may have resulted in a publicly traded “juggernaut” to compete with Coinbase and FTX.

That was at least the allegation made by DCG CEO Barry Silbert in a recently discovered email to colleagues dated October 2022, after a luncheon with Winklevoss—three months before Genesis went bankrupt.

Lawyers for DCG and Barry Silbert revealed the email as part of a March 6 move to dismiss a $3 billion fraud lawsuit brought by New York’s Attorney General. The email was used to refute charges that Silbert knew Genesis was bankrupt and felt it should be kept secret from creditors.

The email was used to refute charges that Silbert knew Genesis was insolvent and felt it should be kept secret from counterparties, with attorneys claiming that Silbert’s actions demonstrated the reverse.

“He is intrigued about the idea of a closer partnership between Genesis/Gemini/DCG, including a potential merger of the companies,” Silbert said in a statement.

Silbert said that the combination would be “super exciting to investors,” with a possible $1 billion fundraising leading to a public offering within 24 months.

“Combined Gemini and Genesis would be a juggernaut,” Silbert allegedly told Winklevoss, adding that it would be “competitive with Coinbase and FTX” and that Gemini could become the world’s biggest cryptocurrency custody provider.

At the time of the lunch, the two companies had been involved in a cross-platform lending cooperation for 18 months. However, GGC was facing “hundreds of millions of dollars in losses” as a result of its overexposure to the now-defunct Three Arrows Capital.

Silbert also claimed that he was open with Winklevoss about GGC’s financial problems, which were favorably received:

“I gave him a clear warning […] He handled that aspect fairly well and recognizes the need of working together to limit the danger.”
He also emphasized to colleagues that Genesis had to do all possible to “avoid a bank run,” or else it would be “difficult, if not impossible,” for the business to secure replacement funding.

“If Genesis declares bankruptcy, I will be unable to obtain funds via DCG. So the ball is in their court to prevent anything horrible from occurring.”
Silbert informed his colleagues that Winklevoss will consult with his twin brother Tyler Winklevoss to determine “how to best proceed.”

In the end, the merger failed.

Gemini introduced its “Earn” program in February 2021, allowing clients to lend their coins to GGC in return for interest payments.

However, one month after the email, GGC banned all withdrawals, including those from Gemini’s Earn program, blaming “unprecedented market turmoil” caused by FTX’s shocking collapse.

GGC eventually went bankrupt in January 2023, owing $1.2 billion to Gemini’s 232,000 Earn clients.

Since then, Winklevoss has threatened to sue Silbert on many times, accusing him of participating in “fraudulent behavior” via a “culture of lies and deceit.”

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