News
Gemini receives $100 million from Winklevoss twins: Bloomberg report
According to a 10 April Bloomberg report, Gemini co-founders Tyler and Cameron Winklevoss have made a personal loan worth $100 million to the cryptocurrency exchange. The news comes as attempts to raise funds from outside investors for the United States-based exchange failed.
Winklevoss twins made the loan amid regulators looking into Gemini’s activities. The Securities and Exchange Commission (S.E.C.) charged Gemini and Genesis Global Capital with offering unregistered securities through the exchange’s Earn program in January.
Following reports that many users claimed assets in their Earn accounts were FDIC-protected, New York’s Department of Financial Services also reportedly began investigating the exchange.
As the S.E.C. announced the charges, Tyler Winklevoss accused the Commission of issuing a “manufactured parking ticket.” He claimed that the exchange had been in talks with the regulator for over a year prior to its enforcement action.
1/ It’s disappointing that the @SECGov chose to file an action today as @Gemini and other creditors are working hard together to recover funds. This action does nothing to further our efforts and help Earn users get their assets back. Their behavior is totally counterproductive.
— Tyler Winklevoss (@tyler) January 12, 2023
Gemini laid off 10% of its workforce in January, adding to the initial wave of layoffs in June 2022. Meanwhile, Gemini’s chief operating officer (CEO) Noah Perlman also left the exchange for Binance, as its chief compliance officer.
FTX’s implosion fueled Gemini crisis
The consequences from FTX’s demise in November 2022 resulted in the bankruptcy of crypto lender Genesis Global Holdco. This ‘severely bruised’ Gemini. The exchange’s sole partner on its Gemini Earn lending product had been Genesis Global. When Genesis suspended withdrawals in November, Gemini was forced to pause redemptions on Earn accounts.
The move stranded $900 million in customer funds, sparking a feud between the Winklevoss twins and Barry Silbert, CEO of Digital Currency Group, Genesis’ parent company. In February, the two parties reached a preliminary agreement to settle the dispute, under which Gemini would contribute up to $100 million.
FTX collapsed in 2022, leading to a slowdown of the crypto industry. After this, venture funding for crypto startups plummeted by 80% to $2.4 billion in the first quarter compared to the same period last year.
