The Winklevoss Twins first made their debut on the silver screen in the 2010 David Fincher film, “The Social Network,” where the duo was seen inventing the precursor to Facebook with then Harvard-classmate, Mark Zuckerberg.
Years later, the twins sued Mark Zuckerberg, walking away with a mere $65 million, $11 million of which would be invested in Bitcoin. This move transformed the twins into one of the wealthiest Bitcoin holders in the world. They’re now worth more than $2 billion at Bitcoin’s current price of $17,000.
What do the Winklevoss Twins have to do with FTX? The twins were one of the early investors in FTX, back when Sam Bankman was making his rounds in Silicon Valley looking for visionaries with deep pockets. And he found exactly what he was looking for in the Winkelvoss twins and their recently minted Gemini Group.
Cameron Winklevoss Speaks Out
Cameron Winklevoss said Monday that Gemini, the crypto exchange he co-founded with his brother Tyler in 2014, has hired lawyers and formed a creditors committee to recoup funds following a report that $900 million of its customers’ money was frozen after crypto broker Genesis halted withdrawals last month due to liquidity issues.
“Returning your funds is our highest priority, and we are operating with the utmost urgency,” Cameron Winklevoss wrote in a post on Twitter.
Genesis announced on Nov. 16 that it was freezing withdrawals from a key platform as a result of “unprecedented market turmoil” in the wake of the implosion of Sam Bankman-Fried’s FTX crypto empire, which filed for bankruptcy on Nov. 11.
How are Genesis and Gemini Related?
Genesis was the main partner of Gemini’s “earn” program, in which its retail investors received payments for allowing their crypto assets to be loaned out to others. Some $900 million of Gemini customer deposits had gotten hung up as a result, according to a person familiar with the matter.
“We’ve begun discussions with potential investors and our largest creditors and borrowers, including Gemini and DCG, to agree on a solution that shores up our lending business’ overall liquidity and addresses clients’ needs,” Genesis’ interim chief executive Derar Islim told clients in a letter seen by Reuters.
After FTX’s bankruptcy, the crypto lending arm of US digital asset broker Genesis Trading announced the suspension of customer redemptions. It was later revealed that its derivatives business had nearly $175 million in locked funds in an FTX trading account.
Genesis spent several days attempting to secure $1 billion in capital from potential investors which failed. It was also reportedly in talks with Binance for a fresh cash injection. However, the crypto exchange decided to pass the offer due to a conflict of interest some of its business could create in the future.
What Does the Future Hold for Crypto Platforms?
Where does Genesis go from here, and what about the other crypto trading platforms? Is this the coming end of all things hedge funds and lending in crypto, or will confidence in leverage and lending be restored by new legislation and improved corporate transparency?
Christine Lagarde, European Central Bank (ECB) president, reiterated her stance and deemed supervision of crypto to be an “absolute necessity” for the European Union. In the US, the FTX collapse continues to be the focus, with a Senate hearing scheduled for December 1st. Thursday’s hearing, titled “Why Congress needs to act: Lessons learned from the FTX collapse,” is one of at least two focused on the downfall of the Sam Bankman-Fried exchange.
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