To clear the air on the allegations raised by Gemini CEO Cameron Winklevoss, founder of Digital Currency Group, Barry Silbert has now written a letter to his shareholders. In the Tuesday letter, Silbert clarified its relationship with bankrupt cryptocurrency hedge fund Three Arrows Capital (3AC) and with Genesis Global Capital, a crypto lending subsidiary.

The DCG CEO stated that the firm did not have a relationship with 3AC, and he only remembers a phone call with one of the firm’s co-founders in 2020.

Recall that the Gemini CEO had accused DCG and Silbert of initiating bad decisions with troubled Three Arrows Capital (3AC).

According to Winklevoss, Genesis loaned $2.36 billion to the crypto hedge fund. As revealed by Winklevoss, the funds became liquidated, leaving Genesis with a loss of over $1.2 billion.

“At this point, Barry Silbert had two legitimate options: restructure the Genesis loan book (inside or outside of bankruptcy court) or fill the $1.2 billion hole. He did neither," the Gemini CEO noted.

Winklevoss further stated that DCG masterminded a campaign of deceit regarding Genesis’s financial issue to manipulate Gemini, allowing users to believe everything is fine. The Gemini executive opined that DCG owes $1.675 billion to Genesis. These revelations thus heightened speculations that DCG might be enduring a possible financial crisis.

Barry Silbert describes lingering speculations about the financial statuses of DCG and Genesis as false and misleading. Meanwhile, in the recent letter, Silbert maintained that DCG owes Genesis Global Capital US$447.5 million and 4,550 BTC (US$78 million).

According to the CEO, these debts are meant to be due in May 2023. Further, he insisted that DCG borrowed the funds on an arm’s length basis, priced using the prevailing market interest rates.

The CEO further confirmed that DCG has never coordinated its purchase or sale of GBTC or any other investment with Three Arrows Capital. He claimed Genesis, its subsidiary, was the one who had a trading relationship with the crypto hedge fund. 

But Silbert added that when the now-bankrupt 3AC defaulted on its loans from Genesis, DCG and its board members resolved to step in. 

As part of the measures towards supporting Genesis and avoiding further contagion in the market owing to the default by 3AC, the CEO said DCG adopted a mechanism that involves a $1.1 billion promissory note. 

Silbert added that the loan, expected to mature in 2032, replaces Genesis’s unsecured loans with troubled 3AC. However, he said the DCG liquidation proceeds would go toward the settlement of promissory notes under the agreement. Silbert added that DCG didn’t take any payment for the note, indicating that the firm shared in the loss of its lending subsidiary.