Gemini creates a ‘Juggernaut’ with Genesis before going to smoke.

Gemini co-founder Cameron Winklevoss was once tipped to merge with Digital Currency Group (DCG) and Genesis Global Capital (GGC), a cryptocurrency lending firm that could compete with publicly listed “juggernauts” like Coinbase and FTX.

At least, that's what DCG CEO Barry Silbert claims in a new email he sent to colleagues after dining with Winklevoss in October 2022 — three months before Genesis finally filed for bankruptcy.

The email was shared by attorneys representing DCG and Barry Silbert as part of a March 6 motion to dismiss a $3 billion fraud lawsuit filed by the New York state attorney general. The email was used to counter the allegations that Silbert knew Genesis was bankrupt and had to hide it from colleagues.

While the email was used to argue for the case that Silbert knew Genesis was bankrupt and believed it should be hidden from partners, lawyers argued Silbert's actions showed the opposite.

“He is very excited about the idea of ​​a closer partnership between Genesis/Gemini/DCG, including a merger of the companies,” Silbert wrote.

Silbert said the merger is “extremely exciting for investors” and could raise $1 billion in a public listing within 24 months.

“A combined Gemini and Genesis will be a juggernaut,” Silbert reportedly told Winklevoss, “competing with Coinbase and FTX” and potentially making Gemini the world's largest cryptocurrency custodian.

At the time of the lunch, the two organizations had been closely linked for 18 months through the platform's lending partnership. But GGC faced “hundreds of millions in losses” from overexposure to Three Arrows Capital.

Silbert wrote about GGC's financial problems, which he was well-received in favor of Winklevoss:

“I have clearly informed him […] He's incredibly taken that part and appreciates that we have to work together to tackle that risk.

He also stressed to colleagues that Genesis must do everything possible to avoid a bank run, or it will be “difficult, if not impossible” for the company to find replacement funds.

“I cannot raise money with DCG if there is a risk of Genesis going bankrupt. So the ball is in their court to prevent anything bad from happening.

Silbert told his colleagues that Winklevoss would go back to his twin brother, Tyler Winklevoss, with ideas on “how to proceed better.”

In the end, the merger never went through.

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Gemini launched its “Earn” program in February 2021, where customers lend their coins to GGC for interest payments.

However, that effort passed the point of no return when, a month after the email, GGC stopped issuing – including those from the Gemini Earnings program – citing “unprecedented market turmoil” stemming from FTX's shocking collapse.

GGC then filed for bankruptcy in January 2023, leaving Gemini's 232,000 customers with $1.2 billion in debt.

Since then, Winklevoss has repeatedly threatened to sue Silbert and called him involved in a “fraudulent practice” in a “culture of lies and deceit.”

Journal: Unstable Coins: Debasement, Bankruptcy and Other Risks Looming.