If the drama between Genesis (a subsidiary of Barry Silbert’s Digital Currency Group) and Gemini (the Winklevoss twins’ cryptocurrency exchange) could get more dramatic, it just did.
If you’re unfamiliar with the Twitter war between Silbert and the Winklevoss twins, here’s a summary. 🗒️
- Sam “I’m Sorry” Bankman-Fraud’s FTX collapse in November 2022 brought down almost everyone and anything in the crypto leverage/lending path.
- One of those objects in the avalanche of FTX poo was Gemini’s Earn program.
- Genesis then used the loaned crypto in various ways to generate revenue and pay interest to the Gemini Earn lenders.
What is Gemini Earn?
In a nutshell, Gemini offered customers a program called Gemini Earn where customers could deposit crypto into an ‘Earn’ account and receive up to 1-ish to 8-ish % APY on $BTC.X, $ETH.X, $USDC.X, and other various altcoins and stablecoins. Interest rates were/are crypto-specific. 🌰
But then, on November 16, 2022, Genesis tells Gemini Earn customers the legal equivalent of, “uh, ya, we can’t give you your stuffs because we don’t have your stuffs.”
Today Genesis Global Capital, @GenesisTrading's lending business, made the difficult decision to temporarily suspend redemptions and new loan originations.
— Digital Currency Group (@DCGco) November 16, 2022
Gemini Responds:
1/6 We are aware that Genesis Global Capital, LLC (Genesis) — the lending partner of the Earn program — has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days. https://t.co/9e48pF3Ymn
— Gemini (@Gemini) November 16, 2022
Fast forward to Jan 2, 2023, Cameron Winklevoss Tweets an open letter to DCG’s Barry Silbert:
Earn Update: An Open Letter to @BarrySilbert pic.twitter.com/kouAviTho4
— Cameron Winklevoss (@cameron) January 2, 2023
You can read the replies from Silbert and Winklesvoss in the above Twitter thread.
While Gemini and Genesis duke it out, the SEC also jumps into the fight. 🥊
Yesterday, the SEC issued a press release notifying the public that they’ve charged Genesis and Gemini for the unregistered offer and sales of securities to retail investors through Gemini’s Gemini Earn program.
From the Press Release, SEC Chairman Gensler was quoted saying, “We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors,” said SEC Chair Gary Gensler.
“Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law.”
We’ll keep you updated as this story progresses. 🗞️