Gemini Withdrew $282M From Genesis Global Months Before Bankruptcy Filing: Report

Several months before Genesis Global Holdco LLC halted deposits and eventually declared bankruptcy, cryptocurrency exchange Gemini Trust Co. reportedly withdrew a significant sum from the lender.

This move was part of an initiative by Gemini, owned by the Winklevoss twins, Tyler and Cameron, to allow their customers to earn yields on their crypto tokens through the Earn program in collaboration with Genesis, Bloomberg reported.

Such developments in the crypto world will likely be a topic of discussion at Benzinga's Future of Digital Assets conference on Nov. 14. The event promises to shed light on the evolving digital asset landscape and its implications for the future.

In August 2022, an anonymous source revealed that Gemini had withdrawn approximately $282 million in cryptocurrency from Genesis.

This withdrawal was intended to establish a reserve to guarantee instant redemptions for Gemini Earn customers. It was emphasized that none of these funds were directly allocated to the Winklevoss twins. 

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Following the downfall of FTX, which further destabilized the already shaky crypto market, Genesis suspended customer withdrawals.

By January, they had sought Chapter 11 bankruptcy protection in New York. In response, Gemini has lodged a $1.1 billion claim in the bankruptcy court on behalf of its Earn users.

The aftermath of the withdrawal freeze has seen Gemini, Genesis, and the parent company, Digital Currency Group (DCG), engaged in intense settlement discussions.

This period has been marked by public disagreements between DCG's founder, Barry Silbert, and the Winklevoss twins.

Although a preliminary agreement was reached in February, it was never finalized. Mediated talks also failed to produce a universally acceptable settlement.

Consequently, in July, Gemini filed a lawsuit against DCG, accusing them of fraud.

In this legal battle, Gemini stated its intention to end the Earn program in mid-October 2022.

They also mentioned a direct meeting between one of its founders and Silbert, who tried to alleviate concerns about insolvency.

DCG responded by dismissing the lawsuit as a mere "publicity stunt" and denied any allegations of misconduct.

In September, Genesis filed a lawsuit against its parent company, DCG, for over $620 million in unsettled loans. 

Separately, both Genesis and Gemini faced charges from the U.S. Securities and Exchange Commission (SEC). The commission claimed in January that the Earn program was essentially an unauthorized offer and sale of securities.

Tyler Winklevoss, in a message on the platform once known as Twitter, likened the charges to a "manufactured parking ticket."

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