Tyler and Cameron Winklevoss, owners of Gemini exchange, reportedly withdrew around $280 million from Genesis Global before the crypto lender froze customer deposits and filed for bankruptcy.
The two companies had a joint program called “Earn” that allowed customers to earn interest on their cryptocurrency holdings. Through this program, users of Gemini could lend their digital assets through Genesis. In August 2022, Gemini made a significant withdrawal of cryptocurrency funds from Genesis, according to an anonymous source.
The withdrawn funds were intended to establish a reserve for the Gemini Earn program participants to facilitate immediate redemptions. It is claimed that none of the withdrawn money was given to the Winklevoss twins themselves. Neither Genesis nor Gemini have commented on the matter yet. Following the collapse of FTX, which had a big impact on the crypto market, Genesis froze customer withdrawals.
Gemini has sued Genesis for $1.1 billion on behalf of its Earn program users.
In January, Genesis Global filed for Chapter 11 bankruptcy protection, and since then, Gemini, Genesis, and Genesis’ parent company Digital Currency Group (DCG) have engaged in settlement negotiations. These negotiations sometimes turned public with disputes involving DCG’s founder, Barry Silbert, and the Winklevoss twins. Although a tentative agreement was reached in February, it was never finalized. Mediated negotiations that followed also failed to reach an agreement, leading Gemini to sue DCG for fraud in July.
Gemini claimed that it tried to terminate the Earn program in October 2022 and had a face-to-face meeting with Silbert, who addressed concerns about insolvency. A spokesperson for DCG dismissed the lawsuit as a publicity stunt and denied any wrongdoing.
In September, Genesis sued DCG for over $620 million in unpaid loans. Both Genesis and Gemini were also charged by the U.S. Securities and Exchange Commission in January for alleged unregistered sale of securities through the Earn program.