Crypto exchange Gemini Trust, cofounded by the Winklevoss twins, withdrew $280 million held in the firm’s lender, Genesis, just months before it collapsed and accounts were frozen, according to two sources familiar with the matter.
As reported by the New York Post (NYP) and subsequently Bloomberg, the huge sums were pulled from Genesis between August 5 and August 10 of last year. It’s unclear whether these funds were Gemini assets or the Winklevoss twins’ own crypto.
However, according to one of the sources, the withdrawn funds were used to create a reserve for Gemini Earn customers to make immediate redemptions.
- By November 16, Genesis had collapsed.
- Gemini Earn customer deposits worth $900 million were frozen.
- In January, Genesis filed for chapter 11 bankruptcy.
Legal disputes pile up for Gemini, Genesis, and DCG
Since then, the Winklevoss twins have publicly fought with Genesis, its parent firm Digital Currency Group (DCG), and its founder, Barry Silbert, over the return of the $900 million in Gemini Earn customer deposits. Mediations and negotiations have fallen through, resulting in Gemini suing DCG for fraudulently covering up its insolvency in July this year.
The lawsuit claims that Gemini tried to terminate its Earn product in mid-October 2022, before the $280 million in funds were withdrawn. One of the Winklevoss twins apparently had an in-person meeting with Silbert, who said insolvency wasn’t on the horizon.
To make matters worse, Genesis sued DCG in September over $620 million in unpaid loans. And both Genesis and Gemini have been sued by the Securities and Exchange Commission (SEC) for selling unregistered securities through Gemini Earn.