SAN FRANCISCO – Billionaires Tyler and Cameron Winklevoss dipped into their own pockets to support their crypto exchange Gemini Trust, which has faced numerous setbacks during the year-long market downturn for digital assets.
The twins made a US$100 million (S$133 million) loan to Gemini recently, according to two people familiar with the matter. The move came after Gemini had informally sought funding from outside investors in recent months without coming to any agreements, according to three people. Gemini and the Winklevoss brothers did not respond to requests for comment.
The Winklevoss twins first hit the headlines in 2004 when they sued former Harvard classmate Mark Zuckerberg, claiming he stole their idea for Facebook.
Venture funding for crypto start-ups has cratered following the collapse of crypto exchange FTX and slowdowns in the technology and crypto industries, plummeting 80 per cent to US$2.4 billion in the first quarter compared with the same period last year, according to data from research firm PitchBook.
Gemini has experienced its own troubles during the crypto bear market, a sharp contrast to when it raised US$400 million at a valuation of US$7.1 billion in November 2021.
Fallout from the implosion of FTX led to the bankruptcy of crypto lender Genesis Global Holdco, severely bruising Gemini in the process. Genesis Global had been Gemini’s sole partner on its Gemini Earn lending product, and when Genesis froze withdrawals in November, that forced Gemini to pause redemptions on the Earn accounts. The move left US$900 million of customer money in limbo and sparked a heated spat between the Winklevoss twins and Mr Barry Silbert, chief executive officer of Digital Currency Group, the parent company of Genesis.
In February, the two parties reached an agreement in principle to resolve the dispute, under which Gemini would kick in as much as US$100 million. The Winklevoss loan will not go towards Earn, but rather to fund operations, one person familiar with the matter said.
The United States Securities and Exchange Commission has sued Gemini and Genesis, alleging that the Earn product broke securities laws. Gemini also faces a lawsuit from the Commodity Futures Trading Commission, which alleges that Gemini misled the derivatives regulator in a bid to launch the first US-regulated Bitcoin futures contract. In January, Gemini shed 10 per cent of its workforce, adding to a wave of layoffs in June. The exchange also lost its chief operating officer, Mr Noah Perlman, who went to rival Binance as chief compliance officer.
Gemini’s market share of global spot trading volume has dropped to 0.13 per cent from 0.2 per cent a year ago, based on data from CryptoCompare. Gemini logged US$13 million in spot trading volume in the last 24 hours. Coinbase, the US’ biggest crypto exchange, did about US$660 million in the same period, according to CoinMarketCap. BLOOMBERG
