• Cameron Winklevoss has leveled claims of fraud against Genesis and Digital Currency Group (DCG), alleging they defrauded Gemini and over 340,000 Gemini Earn users.
• Winklevoss claims that instead of taking action to restructure and protect users, Genesis marked a 10-year promissory note down as a current asset.
• The letter concludes with a demand that Barry Silbert be removed as CEO of DCG, as he has proven himself unfit and unwilling to properly run the company.

Cameron Winklevoss, the Co-Founder of Gemini, has released an extensive letter that alleges that Genesis and its parent company, Digital Currency Group (DCG), have committed fraud against Gemini and more than 340,000 Gemini Earn users. The letter accuses the companies of trying to deceive users into believing that $1.2 billion of working capital had been injected into the company when in reality, they had only marked a 10-year promissory note down as a current asset.

The letter explains that this alleged fraud began when Genesis Global Capital LLC, Genesis Trading’s $2.8 billion crypto lending arm, experienced losses of at least $1.2 billion due to a collapse of cryptocurrency hedge fund Three Arrows Capital. Instead of taking action to restructure and protect users, the firm allegedly marked a 10-year promissory note down as a current asset, which, according to the letter, “refers to cash, cash equivalents, or other assets that can be exchanged into cash within one year.” However, Winklevoss makes the point that a promissory note with a principal repayment due in 10 years does not meet the definition of a “current asset.”

Furthermore, the letter claims that Genesis was lending to Three Arrows Capital without taking into account the risk of these loans, as the crypto hedge fund was apparently redirecting investment into Grayscale Investments’s GBTC, which limited the growing discount of the Trust. This risk was then passed on to the users of Gemini Earn. Additionally, the letter alleges that greed is what drove these investment decisions, which in turn led to the loss of Gemini Earn users’ funds.

The letter concludes with a demand that Barry Silbert be removed as CEO of DCG, as he has proven himself unfit and unwilling to properly run the company. It argues that there is no path forward as long as Silbert remains in his position.

• On January 3rd, 2009, Satoshi Nakamoto created the Genesis block in the Bitcoin blockchain, kickstarting a movement based on sound money and property rights.
• The Genesis block contained the message “Chancellor on brink of the second bailout for banks”, signaling Bitcoin’s opposition to central bank policies.
• Bitcoin’s distributed network of nodes allows individuals to take up the reins of their financials and access a monetary system that is not debased or controlled.

It was a cold and dark winter day on January 3rd, 2009, when a single person, Satoshi Nakamoto, made a move that would spark a revolution. On that day, the first block in the Bitcoin blockchain was created, kicking off a movement that, more than a decade later, is still alive and growing. This singularity has been heralded countless times, and today, its purpose has become ever more clear and, in many ways, necessary.

As a testament to its birthdate, the Genesis block contained a message in its code: “Chancellor on brink of the second bailout for banks.” This simple but powerful message serves as an anchor to the physical world and conveys a manifesto: Bitcoin stands against the central bank policies enabled by a culture of easy money. Instead, it seeks to restore accountability and antifragility through a monetary system based on sound money, one that cannot be debased or controlled, manipulated or manufactured to benefit a lucky few.

The fundamental properties of Bitcoin make it possible for this dream to be realized. Powered by a distributed network of nodes, each running the protocol’s software and as such enforcing its rules, Bitcoin enables individuals to take up the reins of their financials, offering access to a monetary system that is not debased or controlled. It levels the playing field, ensuring property rights to millions worldwide, equally and irrespective of their status, race, religious beliefs, gender or nationality.

Today, more than ever, the importance of Bitcoin is becoming more evident. It has the potential to transform the lives of millions, allowing them to enjoy financial freedom and economic autonomy. It is a powerful tool, a system that seeks to create a fairer, more prosperous world.

• MicroStrategy bought 2,395 BTC for $42.8 million and then sold 704 BTC at a loss on Dec. 22 to offset previous capital gains.
• Two days later, MicroStrategy bought back 810 BTC at a higher price.
• As a result of these transactions, MicroStrategy now holds 132,500 BTC with an unrealized loss of over $1.8 billion.

Software analytics company MicroStrategy has sold bitcoin for the first time since it first began adding the digital currency to its treasury in 2020. This sale took place on December 22, 2022 and was carried out in order to generate a net tax benefit, as the losses involved in the sale are able to offset previous capital gains.

Prior to the sale, MicroStrategy had purchased 2,395 BTC for $42.8 million between November 1 and December 21, 2022. This purchase was done at an average price of $17,871 per bitcoin, inclusive of fees and expenses. On December 22, MicroStrategy sold 704 of those bitcoin in order to offset previous capital gains.

Two days later, MicroStrategy bought back 810 BTC for a higher price, which was $16,845 per BTC. After the sale and purchase, MicroStrategy’s bitcoin holdings increased by 2,500 BTC and now stands at 132,500 BTC, purchased for about $4.03 billion at an average price of $30,397 per bitcoin. This purchase has resulted in an unrealized loss of over $1.8 billion for the company.

The sale and purchase of bitcoin was headed by CEO Michael Saylor, who has been the driving force behind MicroStrategy’s foray into the cryptocurrency market. With this purchase and sale, MicroStrategy has become one of the largest institutional holders of bitcoin, and has helped to demonstrate the value and legitimacy of the digital currency market.

• Channel jamming is a threat to the Lightning Network where an attacker can route payments from themselves to themselves and refuse to finalize them, locking up liquidity and preventing nodes from routing fees.
• Last month, Lightning developer Antoine Riard proposed a formal specification for a solution to this problem that includes a form of anonymized credentials and Chaumian ecash tokens to build a reputation scoring system without negatively impacting user privacy.
• This proposal could help protect nodes from channel jamming and make the Lightning Network more secure and efficient.

The Lightning Network is a crucial component of the Bitcoin network, allowing users to send and receive payments with very low fees and near-instant speed. It works by allowing users to set up payment channels between themselves and other users, which allows them to send payments back and forth without having to broadcast a transaction to the blockchain every time. However, this also opens up the possibility of a denial-of-service attack known as “channel jamming”, where an attacker can route a payment from themselves to themselves and then refuse to finalize it, locking up the liquidity that was used for the payment and preventing the node from routing any more payments until the hashed timelock contract (HTLC) timelock expires and the payment refunds. This is a major problem for the Lightning Network, and until now there hasn’t been an effective solution.

Last month, Lightning developer Antoine Riard proposed a formal specification for a solution to this problem. In August, Riard and Gleb Naumenko published research looking at the general problem itself, as well as a number of different solutions that could be used to mitigate or solve it. One of those proposed solutions was a form of anonymized credentials that nodes could use to build a sort of reputation scoring system for users routing payments through them without having to dox or associate that reputation with a static identifier that would negatively impact peoples’ privacy. This solution has now become the formal protocol proposal made by Riard last month.

At its core, the proposal is based on the use of Chaumian ecash tokens. These are centralized tokens issued by a mint authority in a way that prevents the issuance of a token from being correlated to the redemption of a token later. This is done by signing a token in a blinded way, allowing the receiver of the token to unblind it without invalidating the signature. The issuer can then verify it is valid and not counterfeit. This makes it possible for nodes to anonymously build up a reputation score, without having to know or share any other identifying information. When a node receives a payment, they can check if the sender has a good reputation score and decide whether or not to route the payment accordingly. This could help protect nodes from channel jamming and make the Lightning Network more secure and efficient.

The proposal has yet to be implemented, but it has been well-received by the community, and it looks like a promising solution to the channel jamming problem. It also provides a way for node operators to anonymously build and maintain a reputation score, which could be a valuable tool in increasing the trustworthiness of the Lightning Network and its users.