From Gemini to Genesis to Barry Silbert: The Winklevoss twins are in a big crypto mess


The Winklevii—or Tyler and Cameron Winklevoss, to use their given names—first gained notoriety in the mid-2000s when they sued Meta founder and CEO Mark Zuckerberg, claiming he had stolen the their idea for Facebook when they studied at Harvard. The story of the 6′ 5″ brothers was finally detailed in the 2010 film The Social Networkincluding the part where Zuckerberg paid them millions to walk.

Rowing fans may recognize the Winklevii from their sixth-place finish in the men’s pairs rowing at 2008 Beijing Olympics, too, but in recent years, the brothers in the news for a completely new reason: cryptocurrencies. Bitcoin’s early adopters capitalized on the digital asset boom of the early 2010s before launching a crypto exchange, Gemini, in 2014.

Tyler Winklevoss and Cameron Winklevoss of the USA compete in the Men’s Pair Heat 1 at Shunyi Olympic Rowing-Canoeing Park during Day 1 of the Beijing 2008 Olympic Games on August 9, 2008 in Beijing, China.

Jonathan Ferrey/Getty Images

In late 2021, it’s Gemini in the fire and the crypto prices rise to new record highs every day, leaving the identical twins with a combined net worth of over $7 billion. Industry analysts claimed that the party had just started, but after “crypto winter” erased more than $2 trillion of value from the new industry, the worm returns for the Winklevii.

Now, the cases are pending and the brothers share a kindness public war with their former friend, crypto billionaire Barry Silbert, in what COME to the frozen funds of more than 340,000 users of Gemini’s Earn platform.

The Facebook saga leads to early adoption

Hundreds of thousands of people around the world have been affected by Gemini’s recent issues, and nothing would have happened without Facebook.

In the early 2000s, Cameron and Tyler moved from their privileged upbringing in Greenwich, Connecticut—their father was Howard Winklevoss, a professor of actuarial science at the prestigious Wharton business school at the University of Pennsylvania—and studied economics. on the leaves of Harvard. . Along with their classmate Divya Narendra, they came up with an idea for a social network called ConnectU to bring university students together and enlisted the help of a sophomore computer science major named Mark Zuckerberg to build their site. .

Winklevii and Narendra say that Zuckerberg stole their idea to create Facebook. They sued in 2004, and after a legal battle that lasted four years, eventually settled with Meta CEO for $65 million in mediation.

The brothers used their settlement money to invest in several startups through their family office, Capital of Winklevossand also made a timely investment in what was then a little-known digital token, Bitcoin.

In April 2013, they revealed that they had invested $11 million in Bitcoin when it was selling for just $120. A year ago, they launched a cryptocurrency exchange, Gemini, behind the investment, and everything went according to plan until the crypto winter of 2022.

The birth of Gemini

In a interviews with luck on the eve of Gemini’s launch, Tyler Winklevoss described how he hopes to lean towards regulation to make cryptocurrencies accessible to retail investors, while also attracting the institutional crowd.

“Wall Street isn’t into Bitcoin yet, and part of Gemini and licensing is getting them there,” he explained.

The exchange grew quickly, weathering a short period of turmoil in the 2018 bear market, and developing a reputation as a safe US-based option for crypto investors. The Winklevii became some of the first Bitcoin billionaires during the ascendant of Gemini.

But as the pair amassed fortunes as crypto fervor grew, they also began to lean toward riskier investments. Gemini started the NFT market called Nifty Gateway in 2018, but the platform quickly became obsolete security issues and passed by the competition before becoming united to Samsung’s NFT platform.

In September 2021, Cameron Winklevoss also told luck about a—let’s call it, weird—investment into a startup trying to revive woolly mammoths to fight climate change, saying he sees the effort making money through ads on television or “even parks for extinct animals, such as Jurassic Park.”

Earlier that year, Winklevii launched their most important business, Gemini’s Earn platform. The crypto lending scheme offers juicy returns of “up to 7.4%” for crypto deposits, promising that customers can redeem their funds “at any time.” For reference, the average savings account in the US only offers a 0.2% return today.

“Investors today know that a smart, diversified portfolio includes crypto—it’s an investment in their future self,” Tyler Winklevoss said in a press release to launch. “We have designed a program that allows our customers the ability to generate real returns on their crypto holdings without having to sell one of the best performing asset classes of the decade.”

Another victim of crypto winter?

The only problem for Gemini is that in order to offer high returns to investors, the company must make relatively (or definitely) risky bet with crypto to their customers. That’s not difficult in a bull market, but when prices start to fall, finding a solid return can be a challenge.

One of the ways Gemini makes these returns is through Genesis Global Capital, the lending arm of crypto investment firm Genesis Global Trading, which is owned by Silbert’s Digital Currency Group. Gemini lends user funds to Genesiswho in turn lend them to institutional borrowers.

Winklevii is confident that cryptocurrency prices will continue to rise, enabling them to offer high yields to customers consistently through this plan. In September 2021, during the height of the crypto boom, Cameron Winklevoss even told luck that he believes that Bitcoin will end the year at $100,000 (it is less than $47,000).

But if the prices for cryptocurrencies rise in 2022, it will be a new world for Gemini and the Winklevii, and users of Gemini Earn will be more at risk. By June, Gemini was forced to cut 10% of its workforce. And just a few months later, the reports Occurred that the company needs to raise at least $1 billion to prevent bankruptcy for its Gemini Earn platform.

The issue became even worse when Genesis decided to stop issuing redemptions to clients like Gemini after the collapse of FTX—which was once the second largest crypto exchange in the world. The decision means that Gemini has no money to pay to return or redeem funds on their Earn platform.

In a open letter to Silbert this week, Cameron Winklevoss said that more than 340,000 users have more than $900 million in crypto locked up in Silbert’s Genesis Global Capital, and in total Silbert’s companies owe Gemini $1.675 billion. He argued that Silbert engaged in “bad stall tactics” to avoid paying customers.

“The idea in your head that you can hide quietly in your ivory tower and that it will all go away, or that it’s someone else’s problem, is pure fantasy,” he wrote.

Barry Silbert.

Joe Buglewicz/Bloomberg via Getty Images

Silbert responded by saying that he did not borrow $1.675 billion, and that he “never missed an interest payment.” And some critics argue that a collapse is inevitable because of the unsustainable returns offered by Gemini. BlockFi, another crypto lender that offers high returns to investors, filed bankruptcy in November amid crypto winter and FTX collapse.

But Cameron Winklevoss said that he is trying to return the funds to customers, but can not because of Silbert.

“There you go again,” he said. “Stop trying to pretend that you and the DCG are innocent bystanders and had nothing to do with creating this mess. This is completely disingenuous.”

Winklevoss continued to ask if Silbert would commit to repaying the $1.1 billion he owed by January 8, but he got no response.

Now, Gemini’s Earn users are suing Silbert and the Winklevoss twins, alleging that Silbert breached his contract by ceasing to redeem, and the Winklevii sold interest bearing accounts without properly registering them as securities.

The Commodity Futures Trading Commission (CFTC) also filed a lawsuit against the twins for misrepresenting the way they traded and futures contracts moved back in 2017 when they sought regulatory approval.

Gemini’s main business, the crypto exchange, is also in danger of disappearing irrelevant. The volume of exchange spot trading in the last 24 hours is correct $32.8 million. For comparison, the world’s leading crypto exchange, Binance, has volumes that’s over $8.3 billion over the same period.



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