Billionaires Tyler and Cameron Winklevoss recently lent $100 million of their own money to help crypto exchange Gemini Trust Co. run its business, which is struggling due to the market downturn, Bloomberg reported. The move by the founders of Gemini came as the company struggled to obtain funding from outside investors.
The collapse of Sam Bankman-Fried’s FTX resulted in the bankruptcy of crypto lender Genesis Global, which in turn impacted Gemini, as Genesis was Gemini’s partner on the Gemini Earn lending product. Genesis froze withdrawals in November 2022. Consequently, Gemini was forced to halt redemptions on Earn accounts. Funds worth $900 million got stranded in this matter, triggering a dispute between the Winklevoss brothers and Barry Silbert, CEO of Digital Currency Group, Genesis’ parent company.
In February, the two parties reached an agreement to resolve the dispute, under which Gemini would contribute up to $100 million. Reportedly, the above-mentioned loan is not a part of this agreement.
Growing Troubles for Gemini
Both Gemini and Genesis have been sued by the Securities and Exchange Commission (SEC) for alleged violations of securities law, as they sold unregistered securities to retail investors through the Earn product. Tyler Winklevoss said on Twitter that the Earn program was regulated by the New York Department of Financial Services and they had been in conversations with the SEC about Earn for more than one and a half years
He contended that the SEC did not have issues with the Earn program until withdrawals were paused last year. “We look forward to defending ourselves against this manufactured parking ticket,” said Winklevoss and called the SEC’s action “totally counterproductive.”
Amid all this chaos, Gemini’s COO Noah Perlman left the company to take the role of chief compliance officer for leading crypto exchange Binance. Citing CryptoCompare, Bloomberg noted that Gemini’s market share of global spot trading volume has declined to 0.13% from 0.20% a year ago.
