Gemini, the cryptocurrency exchange founded by Cameron and Tyler Winklevoss, has been embroiled in controversy following the withdrawal of $282 million from the now-bankrupt crypto lender, Genesis Global Holdco. The move, which occurred in August 2022, has raised questions about whether the funds belonged to Gemini’s founders personally or if they were corporate assets. The New York Post alleged that the Winklevoss twins withdrew their own money, but Gemini vehemently denied this claim.
Gemini responded to the New York Post’s article on X (formerly Twitter), calling it “misleading” and “pure fantasy.” The exchange clarified that the $282 million withdrawn from Genesis in August 2022 was not the personal funds of the founders or their investment firm. Instead, it belonged to Earn users, who participated in Gemini’s interest-bearing program.
According to Gemini, the withdrawal was prompted by the market turmoil during the summer of 2022, including events such as the collapse of the TerraUSD stablecoin. To manage risk, Gemini decided to increase its liquidity reserves. The $282 million withdrawn from Genesis was utilized to create a reserve, ensuring that Earn users could make immediate redemptions. Gemini asserted that this decision resulted in Earn users having $282 million less exposure to Genesis when the lender suspended redemptions in November 2022.
Genesis Global Capital, owned by Digital Currency Group (DCG), froze customer withdrawals after the collapse of the crypto exchange FTX, ultimately filing for bankruptcy in January 2023. Gemini has been vocal about its dissatisfaction with the proposed bankruptcy plan by Genesis, claiming that it does not offer customers the true value of the money owed.
The withdrawal by Gemini became a focal point in the ongoing disputes and legal battles between Gemini, Genesis, and DCG. Gemini filed a claim seeking $1.1 billion on behalf of Earn users in Genesis’s bankruptcy proceedings. The situation escalated with a lawsuit filed by Gemini against DCG for fraud in July. Gemini accused DCG of being aware of Genesis’s insolvency in 2022 but failing to disclose it to investors. DCG dismissed these claims as a “publicity stunt.”
The aftermath of the Genesis collapse has been marked by public sparring and legal disputes between the involved parties. In addition to Gemini’s lawsuit against DCG, Genesis sued its parent company over $620 million in unpaid loans. Both Genesis and Gemini faced charges from the U.S. Securities and Exchange Commission (SEC) in January, alleging that the Earn program constituted an unregistered offer and sale of securities.
Gemini’s withdrawal of funds from Genesis is a crucial element in this complex narrative, raising questions about transparency, financial responsibility, and the ongoing battles within the cryptocurrency industry. The public dispute between Gemini and DCG adds another layer of complexity to the aftermath of Genesis’s bankruptcy and contributes to the broader conversations around accountability and ethical practices in the crypto space.