Bloomberg: Winklevoss brothers lend $100 million to their own Bitcoin exchange

Tyler and Cameron Winklevoss lent the Gemini cryptocurrency exchange $100 million, Bloomberg reports, citing its own sources.

Sources told Bloomberg that the move followed unsuccessful attempts by the company in recent months to raise external financing.

In November 2022, Gemini paused withdrawals under the Earn revenue program. The problems were tied to an outstanding debt in the amount of $900 million with its main partner — the crypto lender Genesis Global Capital from the Digital Currency Group (DCG).

In January 2023, Cameron Winklevoss brought the dispute into the public sphere. He published an open letter to Barry Silbert, founder and head of DCG, demanding an immediate agreement to repay $900 million.

After the deadline, Winklevoss called for the founder of the holding group to resign. Genesis filed for bankruptcy in the same month.

In early February, the parties reached a principled agreement on a plan to return assets to Gemini users. As part of the plan, the crypto lender agreed to earmark $100 million for the exchange.

3/ In addition, Gemini will be contributing up to $100 million more for Earn users as part of the plan, further demonstrating Gemini’s continued commitment to helping Earn users achieve a full recovery.

— Cameron Winklevoss (@cameron) February 6, 2023

Bloomberg sources clarified that the loan from the founders is not related to these agreements — the funds will be used to finance ongoing operations.

In the crypto winter, Gemini faced business challenges. This culminated in two rounds of layoffs during 2022. In January the exchange fired another 10% of staff and lost its chief operating officer Noa Perlman, who left for a leadership role at Binance.

In December, a group of investors filed a class-action lawsuit against Gemini and the Winklevosses over the sale of unregistered securities in the form of Earn interest accounts. Similar claims against the company were brought by the SEC. The New York State financial regulator opened an investigation into the exchange.

In March, Gemini announced the launch of an international platform for trading crypto derivatives.

In June 2022, the U.S. Commodity Futures Trading Commission filed a lawsuit against the company for misleading information regarding Bitcoin futures contracts.