Winklevoss twins owed $900M by crypto broker as FTX contagion spreads

The crypto exchange owned by the Winklevoss twins is trying to recoup $900 million from a cash-strapped crypto broker that has been gutted in the wake of the FTX collapse, according to a report.

New York-based Gemini — which Tyler and Cameron Winklevoss started after settling their famous beef with ex-Harvard classmate Mark Zuckerberg over who founded Facebook — ran a partnership for customers in its “earn” program in which Gemini lent its coins to the crypto broker Genesis in return for a fixed stream of returns.

But Genesis said it could not afford to make good on all of its returns last month after it faced an “unprecedented market turmoil” as a result of the FTX collapse, according to the Financial Times.

The Winklevosses have created a committee of creditors to try to reclaim their $900 million investment from Genesis and its parent company, Digital Currency Group (DCG).

The Winklevoss twins founded Gemini in 2014
Bloomberg via Getty Images

The Winklevoss twins founded Gemini in 2014, and became the first US-based licensed Ethereum exchange.

Meanwhile, Genesis is trying to raise emergency funds to pay off its debts, and has hired the investment bank Moelis & Co to help figure out how, the FT reported.

Genesis has about $2.8 billion in active loans, according to its website. Its parent company DCG is in $2 billion worth of debt, $1.7 billion of which is owed to its own subsidiary, Genesis.

DCG was founded in 2015 and is one of the biggest investors in the crypto industry, reaching a $10 billion valuation last year.

Genesis, which is run by billionaire Barry Silbert, lost $1.1 billion over the summer on a loan to imploded hedge fund Three Arrows Capital. DCG took on Genesis’s liabilities, subsequently owed $1.1 billion to Genesis, according to FT.

FTX, founded by Sam Bankman-Fried, filed for bankruptcy protection on Nov. 11 in the highest-profile crypto blowup to date, after traders pulled billions from the platform in three days and rival exchange Binance abandoned a rescue deal.


Leave a Comment

Your email address will not be published.

%d bloggers like this: