Winklevoss Faithful Have a $700 Million Problem in Genesis Halt
The billionaire Winklevoss twins, owners of the Gemini crypto exchange, have always portrayed themselves as the grownups in the room. The ones who ordinary investors could trust.
None of that is sparing a chunk of Gemini's customers from the fallout triggered by FTX's collapse, which risks taking down a big swath of the industry.
The trouble stems from a product called Gemini Earn -- which lets investors accrue as much as 8% in interest by lending out their crypto, including Bitcoin, Ether or stablecoins pegged to the dollar. It's a kind of product, widely used throughout crypto, that looks and feels very much like high-yield savings accounts, but with far fewer safeguards if things go wrong.
And in the case of Earn, Gemini's website listed just a single accredited borrower that passed its vetting process: Genesis Global.
On Wednesday, in response to Genesis suspending withdrawals amid FTX's spreading contagion, Gemini also halted redemptions from its Earn product. That left in limbo a program that, according to a person familiar with the matter, has $700 million of customer money tied up in it. The person asked not to be named because the information isn't public.
“People are holding their breath at the moment, waiting or seeing if there's going to be another shoe to drop and what those shoes will be,” Gregory d'Incelli, co-founder of Scenius Capital Management, said in an interview. “People are still in shock. A lot of people are very wounded right now.”
Gemini, which was founded by brothers Cameron and Tyler in 2014, said on its website that it is “working with the Genesis team to help customers redeem their funds from the Earn program as quickly as possible.”
The firm added that “all customer funds held on the Gemini
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