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Users of the Gemini crypto exchange finally see some glimmer of hope as billionaire founders Tyler and Cameron Winklevoss, who happen to be the founders of Gemini Trust Co., have delved into their own resources to support the failing exchange. Gemini faces numerous setbacks and regulatory challenges as it became a victim of the yearlong bear market for cryptocurrencies.
Winklevoss Twins Lend $100 Million
The twins, who gained mainstream fame from the infamous Facebook lawsuit, recently provided Gemini with a loan of $100 million according to a report by Bloomberg, citing unnamed sources. Gemini had allegedly approached outside investors throughout the preceding months, albeit informally, in an effort to secure capital funds. However, the exchange’s multiple attempts went futile as it failed to reach any kind of agreement with the parties.
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Despite the fact that Gemini has been reeling under pressure, the crypto exchange recently announced its plans to launch an international crypto derivatives exchange that will specifically offer perpetual futures. This type of derivative is banned in the U.S. for retail customers as it doesn’t have an expiration date and can be traded with significant leverage, which results in a high-risk investment instrument.
In fact, it’s the users of Gemini Earn — a yield-generating product of the exchange — who have been severely affected by the gruesome aftermath of the FTX collapse. The FTX implosion led to a chain reaction that affected number of prominent crypto businesses in the industry, one of it being Genesis Global.
Gemini’s Tussle With Genesis
Genesis Global had been Gemini’s only partner for its Earn lending program. However, the long-standing partnership turned bitter when Genesis froze customer withdrawals in November in wake of the FTX crisis. This in turn compelled Gemini to halt redemptions on all of their Earn accounts, leaving customers distraught.
In light of this decision, about $900 million in customer funds were left unaccounted for, which provoked a heated argument between the Winklevoss twins and Barry Silbert, the chief executive officer of DGC, the parent company of Genesis. The two sides finally settled their issue in February after months of negotiations.
Additionally, the U.S. SEC filed a lawsuit against Gemini and Genesis on the grounds that the Earn program violated regulations pertaining to the sale of securities. Furthermore, Gemini is being sued by the Commodities Futures Trading Commission (CFTC), which asserts that the exchange lied to the derivatives regulator in an effort to create the first Bitcoin futures contract that is regulated by the United States government.
Also Read: Will U.S. Inflation Data & FOMC’s Minutes Propel Bitcoin’s Price Above 30K?
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