The implosion of crypto exchange FTX last year forced a procession of major firms into bankruptcy. As the FTX contagion spread, the cryptocurrency lender Genesis Global Holdco LLC froze withdrawals last November—and ultimately, filed for bankruptcy in January this year.
Furthermore, Genesis has been embroiled in a bitter dispute with crypto exchange Gemini Trust Co. over the fate of $900 million worth of digital assets that Gemini customers deposited with the crypto lender.
Genesis and Gemini offered customers the so-called product ‘Gemini Earn’ with the promise that they could deposit their crypto holdings and earn as much as 7.4% interest.
Now, some media reports are saying that cryptocurrency trading platform Gemini, owned by the former Olympic rowers Cameron and Tyler Winklevoss, pulled $282 million worth of crypto assets from Genesis. The funds were allegedly withdrawn in August 2022—five months before Genesis declared bankruptcy.
According to a source familiar with the move, Gemini withdrew funds from Genesis to build out a reserve, in hopes that Gemini Earn customers could make “immediate redemptions.” This person went on to claim that none of the money went into the pockets of Winklevoss twins.
The development comes at a time when Gemini has been at loggerheads with Genesis over its bankruptcy plan. In a court filing on August 30, Gemini called out the Digital Currency Group (DCG) for its bankruptcy plan regarding Genesis, saying it lacks clarity and is “woefully light” on crucial information. DCG is Genesis’ parent company.
Gemini also claims that creditors are yet to receive payments from Genesis for the loans that were meant to be paid after they reached maturity in May.
“Despite the Debtors’ repeated promises that a deal is very close. The Debtors are no closer to a confirmable plan that has creditor support today than they were when these cases were filed in January.”
It’s worth noting that as many as 340,000 customers have not been able to access their funds since November, when Genesis froze withdrawals, blaming the “market turmoil” triggered by the bankruptcy of FTX.
In January, the U.S. Securities and Exchange Commission (SEC) sued both Genesis and Gemini—claiming they were illegally selling crypto assets to investors. Earlier this month, Genesis announced it was winding down operations worldwide.
In recent times, Gemini has been plagued by troubles, too. In May this year, the global crypto exchange came under the scanner of Philippines Securities and Exchange Commission (SEC) for operating without “proper authorization.” However, Gemini is determined to forge ahead and plans to invest $24 million for its expansion in India.
