According to a Bloomberg report, Tyler and Cameron Winklevoss, co-founders of Gemini, reportedly made a $100 million personal loan to the cryptocurrency exchange. The news came as efforts to obtain money from outside investors for the U.S. exchange could have been more effective.
In response to regulators probing into Gemini’s operations, the Winklevoss twins made the loan. In January, Gemini and Genesis Global Capital were accused of selling unregistered securities through the exchange’s Earn program by the Securities and Exchange Commission (SEC).
The New York Department of Financial Services reportedly began investigating the exchange after reports that numerous users claimed their Earn accounts housed FDIC-insured assets.
Tyler Winklevoss accused the SEC of issuing a “manufactured parking ticket” when the allegations were announced. He asserted that the exchange had been in communication with the regulator for more than 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
In addition to the initial round of layoffs in June 2022, 10% of Gemini’s employees were terminated in January. In the meantime, Gemini’s chief operating officer (CEO), Noah Perlman, also departed the exchange to become the chief compliance officer for Binance.
Gemini Suffers Blow Following FTX’s Troubles
Genesis Global Holdco filed for bankruptcy due to the repercussions of FTX’s collapse in November 2022. This severely injured Gemini. Genesis Global was the sole associate for the exchange’s Gemini Earn product. Gemini was compelled to postpone redemptions on Earn accounts when Genesis suspended withdrawals in November.
The change left $900 million in customer funds unaccounted for, igniting a feud between the Winklevoss twins and Barry Silbert, CEO of Digital Currency Group, the parent company of Genesis. In February, the parties reached a preliminary settlement agreement in which Gemini would pay up to $100 million to resolve the dispute.
When FTX went bankrupt in 2022, the crypto industry slowed down. After this, venture capital funding for crypto startups dropped by 80% in the first quarter compared to the same time last year, going from $3.6 billion to $2.4 billion.
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