“Unsheltered” Crypto Loan: Winklevoss Twins Invest $100 Million Into Gemini Amid Regulatory Scrutiny

The Winklevoss Twins are investing in their cryptocurrency business in a time of need. The pair, who co-founded the popular Gemini exchange, have recently loaned themselves $100 million to combat the downturn of the crypto market and regulatory scrutiny. Upon reports of the $100-million loan, Cointelegraph reached out to Gemini for a statement but didn’t receive a response. Prior attempts to secure funding through outside investors failed, leading the Winklevoss twins to dip into their own pockets to support the business.

One particular event of regulatory scrutiny that Gemini is facing was charged by the U.S. Securities and Exchange Commission (SEC). The charges against them relate to unregistered securities through the exchange’s Earn program. To make matters worse, the New York Department of Financial Services (NYDFS) launched an investigation after many users claimed their assets from the Earn program were FDIC-protected.

Tyler Winklevoss, the co-founder of Gemini, had lots to say about the SEC’s charges. He went as far as calling them “super lame” and a “manufactured parking ticket.” He pointed out that Gemini had been in discussion with the SEC for more than a year and still received a Wells notice.

Gemini’s Earn program launched in February 2021 and was officially automated until Jan 8th. It allowed users to earn yield rewards by loaning their crypto to the DCG-owned market-making firm, Genesis. The venture ran into trouble when Genesis revealed they had $175 million held up on the now-bankrupt FTX exchange.

DCG tried to prop up the balance sheet with $140 million, but by November 16th Genesis had to suspend withdrawals due to the bankruptcy. Now, the company owes 340,000 Gemini Earn users $900 million.

Despite the charges and regulatory scrutiny that Gemini is now facing, Tyler Winklevoss made sure to add that they will “make sure this doesn’t distract them from the important recovery work they are doing.” It’s unclear how investing their own money in the business will help in the recovery.

It’s clear to many involved in the crypto space that the market downturn hasn’t been easy for businesses. With Tyler and Cameron Winklevoss making a $100 million loan to Gemini, perhaps it will be enough to help them come out of the other side unscathed. The success of the $100 million gamble may become clear over time, as Gemini will have to work to prove the loan was a worthwhile endeavor.

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Rina Giannino
Journalist venturing into blockchain, Rina has been a follower of the technology since 2019 and finally taken the plunge with a career as a journalist in the industry.