In a crypto saga that could rival any Hollywood thriller, the Winklevoss twins’ Gemini exchange reportedly withdrew a staggering $280 million from Genesis Global just months before the crypto lender initiated a freeze on customer deposits and ultimately filed for bankruptcy.
This withdrawal, disclosed by an anonymous source, was made in August 2022. Rather than lining the pockets of the exchange’s founders, the funds were intended to establish a reserve to facilitate immediate redemptions for participants in the Gemini Earn program. This program, a joint venture between Genesis and Gemini, allowed users to earn interest on their cryptocurrency holdings by lending them through Genesis.
While the Winklevoss twins seemingly acted in the best interests of their customers, the aftermath of this move has been nothing short of chaotic. Following the collapse of FTX, Genesis froze customer withdrawals, sparking a series of legal battles and disputes.
Gemini’s $1.1 Billion Lawsuit Unleashed
The exchange sued Genesis for $1.1 billion on behalf of its Earn program users after Genesis filed for Chapter 11 bankruptcy protection. Settlement negotiations ensued but were often marred by public disputes, including clashes between Barry Silbert, founder of Digital Currency Group (DCG), and the Winklevoss twins.
Despite a tentative agreement reached in February, it remained unfinalized, leading to a lawsuit in July, with the exchange accusing DCG of fraud. Gemini alleged that it had tried to terminate the Earn program due to concerns about insolvency and that Silbert had sought to address these concerns in a face-to-face meeting.
Adding more complexity to the quagmire, Genesis sued its parent company, DCG, in September for over $620 million in unpaid loans.
To make matters worse, both Genesis and Gemini found themselves facing charges from the U.S. Securities and Exchange Commission in January. The SEC alleged that the Earn program constituted an unregistered sale of securities, intensifying the legal woes surrounding the Gemini-Genesis debacle.
As the crypto world watches with bated breath, the Gemini-Genesis saga serves as a stark reminder of the unpredictable nature of the digital currency space. With billions at stake and reputations on the line, the crypto drama shows no signs of abating anytime soon.