Crypto companies Genesis and Gemini discussed possible merger in 2022, court documents show

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By Harper Lee

Crypto exchange Gemini and now-bankrupt crypto brokerage Genesis have discussed a possible merger in October 2022 following the collapse of hedge fund Three Arrows Capital, which left Genesis with a billion dollar hole.

The discussion took place over lunch between Barry Silbert, CEO of Digital Currency Group – owner of Genesis – and Gemini co-founder Cameron Winklevoss, according to an email contained in Silbert’s Motion to Dismiss NYAG Lawsuit against him for allegedly hiding the losses.

According to Silbert’s memos, which were sent to other DCG and Genesis executives, he made it clear that Genesis was potentially heading toward bankruptcy and that this could have a material impact on Gemini. This was because Gemini had loaned user funds to Genesis under the exchange’s Earn program – funds that Genesis was unsure it could repay.

Silbert noted that options could range from a business partnership to a complete merger of the companies. At the time, he said the latter option was the most attractive to him because the combined company “would be a heavy hitter and would be competitive with Coinbase and FTX.” He said the combined company would be able to raise between $500 million and $1 billion and go public within two years.

Give Circle a chance to earn its money

Silbert said that, according to his notes, if Gemini were part of DCG’s family of crypto companies, it would be able to benefit from the other companies in its portfolio. This could have included Genesis directing order flow to the exchange, Foundry directing Bitcoin miners to trade and hold with it, and using crypto news publication CoinDesk to attract new customers. He added that rolling out Gemini’s GUSD stablecoin among its portfolio companies could help Circle and USDC get value for money.

“Even without a merger, Gemini and Genesis can do much more together and the two companies should come together, not separate,” Silbert said. “Frankly, ending the Earn partnership introduces a potentially catastrophic risk to Genesis and therefore to Gemini. So they need to at least reverse this decision.”

Silbert noted there were some concerns at the time. He was concerned that Genesis would not be able to replace the necessary liquidity at the pace mentioned. He also feared that Genesis, failing to replace liquidity, would trigger a run on Genesis by other lenders. “We must avoid a bank run, no matter what,” he said.

No merger took place

After this lunch, Gemini and Genesis did not merge and they continued to dispute the repayment of the funds loaned during the Earn program. Genesis filed for bankruptcy in January 2023. A few months later, Gemini sued DCG for alleged fraud related to the Earn program.

In October 2023, The NYAG filed a lawsuit against Gemini, Genesis, DCG, Silbert and former Genesis CEO Michael Moro, alleging the entities filled the billion-dollar hole. DCG sold CoinDesk to Block.one’s crypto exchange Bullish in November 2023. On March 6, 2024, DCG and Barry Silbert filed motions to dismiss the NYAG lawsuit.


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