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Gemini Withdrew ‘Hundreds of Millions’ Before Genesis Collapse: Report

2 mins
Updated by Geraint Price
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In Brief

  • Cryptocurrency exchange Gemini reportedly withdrew $282 million in crypto from Genesis before its insolvency.
  • The cryptocurrency exchange allegedly used the funds to build a reserve for its Gemini Earn customers.
  • None of the withdrawn money reportedly went directly to Gemini's billionaire founders, the Winklevoss twins.
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Updated Sept. 28, 13:30UTC: Gemini has posted a lengthy rebuttal of the allegations, saying the $282 million withdrawn was Earn users’ money.

Gemini wrote:

“The Gemini Earn Program Terms permitted Gemini to establish a “liquidity reserve” for the benefit of Earn users by holding back a portion of the money they deposited into the Earn program. Amidst the broad market turmoil in the summer of 2022, we decided to increase the liquidity reserve.

“As a result, we pulled back $282 million of Earn users’ funds from Genesis on August 9, 2022 and held those funds in the liquidity reserve for their benefit. In hindsight, this proved to be a wise and prudent decision. As a result of our risk management, Earn users had $282 million less exposure to Genesis when Genesis halted redemptions on November 16, 2022.

Cryptocurrency exchange Gemini reportedly withdrew “hundreds of millions of dollars” from the now-bankrupt crypto lender Genesis several months before the entity declared insolvency.

Two individuals who wished to remain anonymous and were knowledgeable about the matter reportedly provided the information.

Gemini Claims Withdrawal For Liquidity Needs

According to a September 28 Bloomberg report, Gemini extracted $282 million worth of crypto from Genesis in August 2022.

This allegedly occurred just five months before the filing for bankruptcy by Genesis’ lending arm on January 20th.

The sources claim that Gemini used the withdrawn funds from Genesis to establish a reserve. This was to allegedly ensure sufficient liquidity for Gemini Earn customers to facilitate “immediate redemptions.”

Furthermore, one of the sources states that neither Cameron nor Tyler Winklevoss personally received any of this money. More commonly known as the “Winklevoss twins,” the duo are the co-founders of Gemini.

“None of the money went directly to Gemini’s billionaire founders, the Winklevoss twins, this person said.”

Digital Currency Group (DCG) owns Genesis and attributes its downfall primarily to the collapse of the crypto exchange FTX in November 2022.

Meanwhile, on September 15, Genesis announced the cessation of its global trading services.

Gemini Asserts Genesis Creditors No Closer to Payment

Gemini has continuously opposed Genesis’ bankruptcy plan in recent times.

On August 31, BeInCrypto reported that Gemini claimed the liquidation plan lacked clarity and was “woefully light” on the specifics.

In a recent court filing, Gemini asserts that this complicates the creditors’ ability to comprehend the payment process.

On the other hand, Cameron Winklevoss continues to voice his opinions during the ongoing legal dispute, openly addressing DCG’s CEO Barry Silbert.

Winkelvoss recently called out Silbert over an alleged inaccurate statement, which Silbert reportedly didn’t think he had an obligation to amend:

““You’ve got to be kidding me, When a company you own says you wrote a $1.1 billion dollar check that you know you didn’t write, yes, you have a duty to correct this.”.

Meanwhile, the crypto exchange further recently claimed that Genesis has made no progress in paying the creditors since the lawsuit was initially filed in January:

“Despite the Debtors’ repeated promises that a deal is very close. The Debtors are no closer to a confirmable plan that has creditor support today than they were when these cases were filed in January.”

Top crypto platforms in the US | March 2024

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Ciaran Lyons
Ciaran is a cryptocurrency journalist based in Sydney, Australia. He particularly enjoys writing about CBDC developments and the practical implementations of cryptocurrency in real-world scenarios. He has also appeared across major television networks in Australia including Channel Ten, Channel Nine and SBS TV. Prior to his foray into cryptocurrency, Ciaran worked as a presenter on national radio station Triple J.
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