Gemini President Cameron Winklevoss demanded the removal of Digital Currency Group CEO Barry Silbert in an open letter, escalating an ongoing spat over the frozen funds of the exchange's Earn users.

"I'm writing to let you know that Gemini and more than 340,000 Earn users have been defrauded by Genesis Global Capital LLC, together with its parent company Digital Currency Group" he wrote, alleging that Genesis had misled the company, Earn users and the public about the company's solvency and financial health.

Earlier in January, Winklevoss had accused Silbert of stalling efforts to reclaim funds for Gemini Earn users, accusing the head of "bad faith stall tactics" and comingling funds at his conglomerate.

The letter lays out what the company believes happened in relation to DCG's involvement with failed hedge fund 3AC. Winklevoss said that Silbert failed to take action to absorb the shock following 3AC's collapse.

3AC allegations

Winklevoss writes that Genesis was willing to "recklessly lend to 3AC because 3AC was using the money for the kamikaze Grayscale net asset value (NAV) trade."

He describes this as "a recursive trade' that ballooned the AUM of the Grayscale Bitcoin Trust (ticker: GBTC) and, as a consequence, the fees earned by its sponsor, Grayscale Investments, LLC (Grayscale), a wholly owned subsidiary of DCG."

“3AC was a mule shuttling the assets between the parties, and as a result Genesis ended up owning massive risk," he adds.

He said that this meant that GBTC shares were kept at bay from the market, meaning a depressed share price, further widening the discount to NAV.

"He chose not to fill the $1.2 billion hole," he wrote. "Instead he pretended to."

He also demanded the removal of Silbert as CEO, saying there is "no path forward" with him in control of the company.

DCG did not immediately respond to a request for comment from The Block.

With additional reporting by Kari McMahon.

This story was updated to correct Cameron Winklevoss' title.