Gemini Trust Co. Relying on Founders for US$ 100 Million
Posted on 04/11/2023
Tyler and Cameron Winklevoss made a US$ 100 million loan to Gemini Trust Co., their struggling crypto exchange. Gemini had been seeking external funding which did not arrive. The nosedive in the price of cryptocurrencies from their highs of late 2021 and the blowup of FTX have made investors wary.
Gemini was hit with charges from the SEC earlier in 2023 for “the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program. Through this unregistered offering, Genesis and Gemini raised billions of dollars’ worth of crypto assets from hundreds of thousands of investors.” The problem occurred when customers took part in Gemini’s interest-bearing crypto accounts, and allegedly found the money was locked in. According to the SEC, in November of 2022, Gemini would not allow customers to “withdraw their crypto assets because Genesis lacked sufficient liquid assets to meet withdrawal requests following volatility in the crypto asset market.” Gemini had US$ 900 million in customer assets at the time.
The SEC issued a bulletin in 2022 warning investors off from interest-bearing crypto accounts: “These products may sound similar to interest-bearing accounts with a bank or credit union, but investors need to be aware that these crypto asset-related accounts are not as safe as bank or credit union deposits.”
