Key Takeaways
- • On May 17, a federal bankruptcy court rejected Digital Currency Group's (DCG) cap on creditor returns and approved a larger $3 billion plan, alongside a settlement with the New York Attorney General's office, per the publisher's update to the story.
- • The approved plan lets Gemini Earn customers be repaid in full at current crypto prices, with bitcoin roughly three times its value when Genesis filed for bankruptcy, though DCG may appeal.
- • The case centers on Barry Silbert, founder of DCG, whose Genesis unit lent Earn customers' deposits to hedge funds including Three Arrows Capital and Alameda Research before its January 18, 2023 bankruptcy.
- • Silbert's DCG has argued that a current-price payout violates US bankruptcy code, and the victims have dubbed the dispute "the Barry Trade," a possible $1 billion dispute over funds.
- • The story is a profile of Silbert's career, from bankruptcy asset sales and SecondMarket to the Grayscale Bitcoin Trust and Genesis, framed around whether he should keep the money.
Summary
A federal bankruptcy court on May 17 rejected Digital Currency Group's argument capping returns to creditors and approved a $3 billion plan, along with a settlement reached by the New York Attorney General's office, according to the publisher's update to the original March 2024 article. The decision, which DCG may appeal, allows customers of Gemini's Earn program to be repaid in full at current crypto prices, a result that would give them substantially more than the value of their deposits when Genesis filed for bankruptcy.
The Earn program was a savings product run by the Winklevoss twins' exchange, Gemini, that paid about 5.5 percent annually and funneled roughly $1 billion in lent crypto to Genesis, a lending unit owned by DCG and led by Barry Silbert. Customers were not aware that their deposits were being lent onward to hedge funds such as Three Arrows Capital and Alameda Research, Sam Bankman-Fried's trading firm. Genesis filed for bankruptcy on January 18, 2023, after the collapse of FTX. Settlement talks stalled through 2023, and a deal to repay customers in full was reached in February 2024.
DCG has contested the payout. A company spokeswoman said that DCG "cannot support a plan that not only deprives DCG of its corporate governance rights but also violates United States bankruptcy code." Victims have called the dispute "the Barry Trade," arguing that Silbert could retain as much as $1 billion that would otherwise go back to them. DCG has said that neither it, Silbert, nor any of its employees were involved in the decision to file Genesis for bankruptcy.
The article traces Silbert's career, from early work selling bankrupt companies' assets and founding SecondMarket, which he sold to Nasdaq in 2015, to the Grayscale Bitcoin Trust, which held $17.7 billion in bitcoin by the end of 2020. Through DCG he invested in Coinbase, Ledger, and Ripple and acquired CoinDesk. The central question the story raises is whether Silbert was a well-intentioned executive or a manager who benefited from the bankruptcy process he understood well.
The Earn program was a savings product run by the Winklevoss twins' exchange, Gemini, that paid about 5.5 percent annually and funneled roughly $1 billion in lent crypto to Genesis, a lending unit owned by DCG and led by Barry Silbert. Customers were not aware that their deposits were being lent onward to hedge funds such as Three Arrows Capital and Alameda Research, Sam Bankman-Fried's trading firm. Genesis filed for bankruptcy on January 18, 2023, after the collapse of FTX. Settlement talks stalled through 2023, and a deal to repay customers in full was reached in February 2024.
DCG has contested the payout. A company spokeswoman said that DCG "cannot support a plan that not only deprives DCG of its corporate governance rights but also violates United States bankruptcy code." Victims have called the dispute "the Barry Trade," arguing that Silbert could retain as much as $1 billion that would otherwise go back to them. DCG has said that neither it, Silbert, nor any of its employees were involved in the decision to file Genesis for bankruptcy.
The article traces Silbert's career, from early work selling bankrupt companies' assets and founding SecondMarket, which he sold to Nasdaq in 2015, to the Grayscale Bitcoin Trust, which held $17.7 billion in bitcoin by the end of 2020. Through DCG he invested in Coinbase, Ledger, and Ripple and acquired CoinDesk. The central question the story raises is whether Silbert was a well-intentioned executive or a manager who benefited from the bankruptcy process he understood well.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.