Gemini Withdrew $282 Million in Crypto from Genesis Before Bankruptcy: Report

The Winklevoss twins, founders of cryptocurrency exchange Gemini, reportedly withdrew over $280 million from their company’s bank, Genesis Global Holdco, in secret.

This occurred months before the lender froze deposits and filed for bankruptcy, raising questions about the twins’ knowledge of Genesis’s financial issues and their actions leading up to the collapse.

Gemini’s $282 million Fund Withdrawal

According to a report, Gemini withdrew approximately $282 million in cryptocurrency from Genesis Global Holdco just months before the latter froze customer deposits and eventually filed for bankruptcy.

Genesis and Gemini had jointly offered their customers the opportunity to earn yields on their crypto tokens through the Gemini Earn program. This program allowed users of Gemini, owned by the Winklevoss twins, to lend their crypto assets through Genesis.

Gemini withdrew the funds from Genesis in August 2022 to create a reserve for facilitating quick redemptions for Gemini Earn customers. Notably, the withdrawn funds did not directly benefit Gemini’s founders.

Following FTX’s collapse, Genesis temporarily halted customer withdrawals and eventually filed for Chapter 11 bankruptcy protection in New York in January. In response, Gemini filed a legal claim, seeking $1.1 billion on behalf of Earn program users within the bankruptcy proceedings.

Legal Disputes after the Collapse of Genesis

However, the following months were marked by several legal battles and negotiations. Gemini, Genesis, and its parent company, Digital Currency Group (DCG), were involved in settlement discussions that frequently unfolded publicly, including disputes between DCG’s founder, Barry Silbert, and the Winklevoss twins.

In February, a preliminary agreement was reached, but it was never finalized. Further attempts at mediated discussions failed to resolve. In July, Gemini filed a fraud lawsuit against DCG. According to the lawsuit, Gemini tried terminating the Earn program in mid-October 2022.

One of its founders met with Silbert to discuss concerns about insolvency. DCG denied these claims, referring to the lawsuit as a “publicity stunt” and denying wrongdoing.

In September, Genesis filed a lawsuit against its parent company, DCG, seeking $620 million in unpaid loans. DCG has chosen not to comment on Gemini’s withdrawal of funds. In January, both Genesis and Gemini were charged by the U.S. SEC, which claimed that the Earn program involved an unregistered offer and sale of securities. Tyler Winklevoss publicly criticized these charges on social media.