- Founder of X3, Andrew, accuses Digital Currency Group (DCG) of having knowledge of Genesis and FTX bankruptcies in advance.
- Andrew alleges that DCG engaged in behaviors that benefited the group while being aware of firms’ insolvency.
In a startling revelation that has sent ripples through the cryptocurrency community, Andrew, the founder of X3, has leveled serious allegations against Digital Currency Group (DCG). These allegations suggest that DCG may have possessed foreknowledge of the bankruptcy situations at Genesis, FTX, and 3AC, raising concerns about financial mismanagement and conflicting interests within the crypto conglomerate.
UPDATE: attempting to keep it as simple as possible on DCG stuff.
– DCG knew 3AC was insolvent before anyone else; bought their $GBTC bags.
– DCG knew FTX was insolvent before anyone else.
– DCG took out huge loans from themselves (Genesis is controlled by DCG).
– DCG knew…— Andrew (@AP_Abacus) September 7, 2023
Allegations of Foreknowledge
In a tweet that has caught the attention of the crypto world, Andrew accuses DCG of various questionable actions, implying a pattern of behavior that favored the group’s interests while having knowledge of impending financial turmoil at several firms.
One of the striking claims is that DCG appeared to be aware of the insolvency of 3AC and FTX before anyone else. Furthermore, it is alleged that DCG took advantage of this knowledge by acquiring holdings in the Grayscale Bitcoin Trust (GBTC) from these troubled entities.
Additionally, Andrew suggests that DCG orchestrated substantial loans from Genesis, a company under its control, despite being aware of Genesis’ impending bankruptcy. The accusations don’t end there; Andrew also asserts that DCG engaged in high-risk trading, specifically the GBTC “carry trade,” and paid substantial fees to itself.
Legal Ramifications
These allegations coincide with two lawsuits filed by Genesis Global against DCG and Digital Currency Group International (DCGI). Genesis Global is seeking to recover over $600 million in debts, including more than $115 million in Bitcoin, which it claims are owed by DCG. The situation is compounded by the fact that these loans, amounting to approximately $620 million, matured in May and involved a significant amount of Bitcoin.
Separately, U.S. authorities are reportedly investigating allegations of fraud made by Cameron Winklevoss, co-founder of cryptocurrency firm Gemini Trust Co., against DCG and its founder, Barry Silbert. Winklevoss contends that DCG and Silbert misrepresented the financial health of Genesis, which filed for bankruptcy earlier this year. Gemini Trust Co. was Genesis’ largest creditor, prompting legal action against DCG and Silbert.
DCG’s Response
In response to these accusations and lawsuits, DCG has vigorously denied any wrongdoing. A company spokesperson declined to comment on the ongoing investigation but emphasized that DCG has consistently conducted its business lawfully and with the highest ethical standards. DCG also reiterated its commitment to cooperating with regulators as necessary.
As these allegations and legal battles unfold, the cryptocurrency industry finds itself grappling with questions of transparency, accountability, and the potential repercussions for the broader financial landscape.
