Cameron Winklevoss, co-founder of the crypto trading platform Gemini Trust Co, has been interviewed by agents from the Federal Bureau of Investigation (FBI), staff from the Securities and Exchange Commission (SEC), and New York City prosecutors in recent months, according to a source familiar with the matter. This significant development is in response to the allegations of fraud Winklevoss has directed against Barry Silbert, CEO of the Digital Currency Group (DCG).

Bloomberg News, the first to report on this matter, highlighted that the interview is part of an “ongoing review” into the financial dealings of DCG and its now bankrupt lending subsidiary, Genesis Global Capital. Despite the gravity of the allegations and the heightened scrutiny from federal authorities, Silbert has not been formally charged with any wrongdoing.

Gemini was the largest creditor of Genesis Global and is suing DCG and Silbert. A spokesperson for DCG communicated to Bloomberg that Silbert has consistently refuted the allegations of fraud. He said that the firm “always conducted its business lawfully and with the highest ethical standards” and that it will assist regulators upon request.

A spokesman for federal prosecutors declined to comment to Reuters, as did the FBI. Gemini also did not respond to requests for comment.

Crypto Conglomerate DCG Vs. Gemini

The roots of this dispute trace back to a partnership between Gemini and Genesis in 2021. Together, they launched an earn programme, allowing Gemini users to lend cryptocurrencies to Genesis with the promise of interest returns. However, in November 2022, Genesis abruptly halted these payouts, citing “unprecedented market turmoil.” Shortly after, in January, Genesis filed for Chapter 11 bankruptcy.

Gemini, being the largest creditor of the now-bankrupt Genesis, initiated legal action against DCG and Silbert. The lawsuit alleges fraudulent lending practices by Genesis and accuses DCG and Silbert of making “false, misleading, and incomplete representations and omissions” to Gemini.

Further fueling the controversy, Winklevoss took to social media, particularly Twitter, to voice his grievances. In a detailed thread from July 7, he accused Silbert of being aware of Genesis’s massive insolvency issues, especially after the collapse of Three Arrows Capital in June 2022, which purportedly resulted in a $1.2 billion deficit in Genesis’ balance sheet. Winklevoss stated, “Barry, DCG, and Genesis together created false financial statements to hide the truth from Gemini and creditors.”

In response to these allegations, DCG labeled the lawsuit as a mere “publicity stunt” by Winklevoss and refuted all claims as “baseless, defamatory, and completely false.”

The controversy surrounding the Earn programme has also attracted regulatory attention. In January, the SEC filed a complaint against both Genesis and Gemini for allegedly offering unregistered securities. Additionally, the New York Department of Financial Services has initiated a separate investigation into Gemini.

The total market cap of crypto has managed to defend the $1 trillion mark in recent days.