DCG’s Barry Silbert is Dodging the Hard Questions, Sources Say

Several sources have told Blockworks DCG’s head, Barry Silbert, isn’t telling the full story relating to his company’s relationship with crypto lender Genesis


Digital Currency Group founder and CEO Barry Silbert; Blockworks exclusive art by Axel Rangel


Barry Silbert is attempting to shield himself and the company he heads from liability, four industry sources speaking under condition of anonymity have told Blockworks.

In a shareholder letter on Tuesday, Silbert pushed back against calls that he should be sacked by Digital Currency Group’s (DCG) board coming from Gemini’s co-founder Cameron Winklevoss.

Chief among the claims under scrutiny from the DCG CEO is that he doesn’t personally call the shots at DCG’s subsidiary companies. Silbert attempted to address the way in which his holding company interacts with its subsidiaries, namely crypto broker Genesis.

“Every aspect of each subsidiary’s day-to-day business is directed by the respective subsidiary’s leadership team,” Silbert said in a Q&A section of the letter. “To be abundantly clear, DCG does not direct any trades, loans, or borrows for Genesis’ business.”

Genesis is at the heart of a dispute between Winklevoss and Silbert’s crypto empire over DCG’s issuance of a $1.1 billion promissory note, due 2033, made to the broker to assume its liabilities following the collapse of former Singapore-based crypto hedge fund Three Arrows Capital (3AC).

Silbert is attempting to portray the promissory note to Genesis as a transaction made “at arm’s length,” diminishing their relationship with each other, one source belonging to a venture fund told Blockworks. 

“At the end of the day, it’s a vertically integrated model, the left hand to the right hand is still the same person, the same parent company,” they said.

How much management direction does DCG give?

Eagle-eyed observers were quick to point out that, according to a Financial Industry Regulatory Authority BrokerCheck report, DCG and Silbert do in fact “direct the management or policies” of Genesis.

FINRA’s BrokerCheck reports are designed to provide information on individual brokers including employment history, professional qualifications and disciplinary actions, among other areas. They also include information on a firm’s profile, history, and operations, which is required to be up-to-date within a 30-day period.

According to the FINRA report, DCG is both a direct and indirect owner of Genesis, while Silbert is an indirect owner capable of directing the management or policies of the firm.

Some are prepared to give Silbert the benefit of the doubt. Jeff Yew, founder of digital asset manager Monochrome believes Silbert is “doing the right thing,” by addressing concerns regarding risk management and regulatory compliance to his shareholders.

“It is still difficult to tell from an outsider’s perspective, but I am sure Barry and his team are seasoned enough to understand the consequences of falsely representing his business,” Yew said.

A second source hailing from a legal background told Blockworks Silbert was acting under a corporate veil doctrine.

“For example, if Barry decided it was best not to repay loans DCG made to a third party, and he made that decision acting in furtherance of the company’s objectives in good faith, then he is protected by the corporate veil,” they said.

But, the source noted, Silbert could be held responsible if he used the corporate veil as a shield to commit fraud or avoid debts. “Seems like that might have happened here,” the source added.

A spokesperson for DCG did not immediately return a request for comment. 

Genesis had, for some time, handled the backend business for Gemini’s Earn program, offering customers up to 8% interest under their partnership, right up until the most recent crypto rout two months ago.

Following the fallout of FTX, a rush of users pulling money out of Genesis brought its lending division to its knees, forcing it to suspend withdrawals in November. Over 340,000 users of Gemini’s crypto lending program “Earn” have been kept out of their own funds ever since.

That’s put Silbert at the nexus of criticism from industry voices like podcaster Peter McCormack.

“340,000 Earn customers MUST take priority over 1 CEO. These are your mistakes @BarrySilbert, own them and do the right thing,” McCormack tweeted Tuesday.

Winklevoss also claims Genesis lent close to $2.4 billion to 3AC, which filed for bankruptcy in mid-2022.

Key to Silbert’s responsibility lies in the answer to the perennial question, ‘what did he know and when did he know it?’ 

“He’s not telling the whole truth and what actually went down,” a limited partner of a Hong Kong venture capital firm told Blockworks, adding, “what about the loans that were lent out to other funds 3AC, Alameda Research and others on the GBTC collateral they used?”

When the fund was trading at a premium then that trade worked out, but when it started to fall into a discount at net asset value then that’s when things turned sour, they said. “He’s still somewhat, artfully evading the question.”

GBTC leans on lending desks to allow them to borrow against the GBTC collateral. Genesis’ lending division is a sister company to Grayscale, which is one of the only lenders incentivized to treat the GBTC “at good value,” according to a fourth source belonging to a crypto venture capital firm Blockworks spoke with.

Finally, Silbert’s letter dismissed earlier reports his company was being investigated by the Department of Justice and the Securities and Exchange Commission. That flew in the face of earlier reports DCG was being probed.

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According to a Bloomberg report last week, citing sources familiar with the matter, the regulatory agencies are investigating the internal financial dealings of DCG’s subsidiaries. Silbert maintains that neither he nor any member of DCG is aware of the Eastern District of New York investigation.

The SEC and DoJ did not immediately return requests for comment.

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