Gemini gets $100 million from Winklevoss twins to compensate users
Gemini, the cryptocurrency exchange run by the Winklevoss twins, has received a personal $100-million loan from its founders. Earmarked for its customers, the payment could be part of the exchange’s agreement with bankrupt Genesis Global Capital and parent Digital Currency Group.
However, it’s not clear whether the $100 million loan and the $100 million Earn commitment from Gemini are related or two separate initiatives. The loan was reportedly made by the Winklevoss twins to fund Gemini amid the crypto market downturn, while the Earn commitment was announced as part of the restructuring deal and recovery plan.
Earlier in February, Genesis attorney Sean O’Neal told a U.S. bankruptcy judge that the agreement will see Barry Silbert-owned DCG exchange its outstanding $1.1 billion note due in 2023 for convertible preferred stock. The deal is part of Genesis’ bankruptcy plan agreed with its creditors that entails DCG refinancing its current 2023 term loans through new term loans issued in two tranches with an aggregate total value of approximately $500 million.
Under the restructuring agreement, this arrangement would either result in a sale of Genesis or turn over its equity to creditors, effectively bringing all entities under the same holding company. Additionally, Gemini will contribute up to $100 million to compensate Earn users with frozen assets and ensure that they will fully recover their funds.
Owing creditors at least $3.4 billion, Genesis had already halted most activity on its platform and froze customer redemptions on November 16, citing a liquidity crunch triggered by significant exposure to FTX. Genesis spent the past two months seeking at least $1 billion in fresh capital, including rumors over a potential investment from Binance, but the funding failed to materialize.
At the time, Gemini co-founder Cameron Winklevoss said there is still much work to be done to complete this process, including further due diligence of Genesis financials and judicial approval of this plan.
The lending unit of Gemini suspended redemptions and new loans in November due to the collapse of FTX crypto exchange. The move raised questions about the health of Gemin’si program that holds more than $900 million in customer money. The Earn accounts were frozen after its main lending partner, Genesis Global Capital, enacted a similar freeze before going bankrupt.
