Gemini Reportedly Pulls $280 Million from Genesis Prior to Crypto Lender’s Bankruptcy

Cryptocurrency exchange Gemini, owned by the Winklevoss twins, allegedly withdrew approximately $280 million from Genesis Global just months before the crypto lender initiated a freeze on customer deposits, eventually leading to its bankruptcy. 

This revelation raises questions about the financial maneuvers and decision-making at Gemini, a once-prominent digital currency exchange that has faced recent challenges.

In August 2022, Gemini purportedly executed a significant withdrawal of cryptocurrency funds from Genesis, as reported by an anonymous source. 

The funds withdrawn were earmarked to establish a reserve to facilitate immediate redemptions for participants in Gemini’s Earn program, allowing customers to earn interest on their cryptocurrency holdings.

A representative from Gemini stated:

“The funds pulled from Genesis were earmarked to establish a reserve intended to facilitate immediate redemptions for Gemini Earn program participants.” 

This move was aimed at safeguarding the interests of their Earn program users, emphasizing the intricate financial dynamics in the cryptocurrency sphere.

Gemini has been embroiled in legal disputes related to the Genesis collapse. In January of the same year, Genesis Global filed for Chapter 11 bankruptcy protection, prompting Gemini to file a claim in the bankruptcy court seeking $1.1 billion on behalf of its Earn program users. The subsequent legal battles and negotiations, at times very public, have added to the complexity of the situation.

This move to withdraw funds before Genesis’s collapse has brought the actions of the Winklevoss twins, founders of Gemini, into the spotlight. The withdrawn funds were designated to secure the interests of their Earn program users, emphasizing the intricate financial dynamics in the cryptocurrency sphere.

Legal and Regulatory Complexities: Unanswered Questions

While the nature of the withdrawn funds—whether corporate assets or the Winklevoss twins’ personal holdings—remains unclear, this development raises questions about their awareness of Genesis’s financial troubles at the time of the withdrawal. This could impact ongoing legal battles and regulatory perspectives on the cryptocurrency industry.

Regarding the situation, a source close to the matter revealed:

“They pulled out their own money, whether that’s corporate funds or their own personal [funds] — only a few months before Genesis announced they were putting up the gates and customers would not be able to withdraw their assets.”

The legality of the withdrawal is open to interpretation due to ongoing debates in various court cases about classifying cryptocurrency products as securities. 

Despite this, the move to withdraw funds just months before the collapse could face legal challenges and potentially impact Gemini and its founders.

This development occurred during significant turmoil for Gemini and the broader cryptocurrency industry. 

Gemini’s US market share has dramatically declined from 26% in 2017 to just 1% in recent years. The company has also experienced several layoffs and relied on a $100 million loan to maintain operations.

Genesis, the lending partner of Gemini, filed for bankruptcy, setting off a creditor process that is yet to be resolved. Negotiations are ongoing between Digital Currency Group (DCG), Genesis, and its creditors to find resolutions amidst the claims and lawsuits.

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