Tyler and Cameron Winklevoss loaned $100 million to Gemini Trust Co. as their crypto exchange is facing setbacks from the broader market conditions, Bloomberg reported citing ‘two [unnamed] people familiar with the matter’.
Winklevoss Twins Back Their Own Exchange
The billionaire Winklevoss twins reached for their pockets as Gemini failed to raise funds from outside investors. The exchange reported that outside investors have been approached in recent months but could not seal an agreement.
The crypto exchange, planning for global expansion, will utilize the fresh loan proceeds for operations. Earlier, a media report revealed that Gemini is considering launching an international crypto-derivative exchange.
Gemini’s focus in the European markets became prominent recently as it gained crypto licenses in Italy and Greece. In addition, it expanded its European presence by launching services in a number of other countries.
Meanwhile, Gemini faces an operational setback as the exchange shed 10 percent of its workforce in January. On top of that, it reduced its staff by 10 percent last June and then again by 7 percent in July.
Venture Capitals Withdrawing from Crypto
The funding from the Winklevoss twins came when venture capitalists were pulling back from the volatile cryptocurrency industry. The collapse of the crypto exchange, FTX and the slowdown in the broader tech industry resulted in an 80 percent decline in venture capital funding in crypto companies to $2.4 billion in the first three months of 2023 compared to last year.
However, the venture capital arms of some crypto giants are going rampant. Recently, crypto exchange Bitget revealed a $100 million initial investment fund to propel the growth of its Web3 projects.
The Troubles of Gemini
Additionally, Gemini directly suffered from the collapse of Sam Bankman-Fried’s FTX empire. Bankrupt Genesis Global Holdco had been the sole partner of Gemini Earn lending product. Due to its exposure to FTX, Genesis halted withdrawals last November, forcing Gemini to pause redemptions on Earn accounts, locking up $900 million in customer assets.
The business crisis soon turned into an ugly social media spat between the Winklevoss twins and Barry Silbert, the CEO of Digital Currency Group, the parent of Genesis Holdco. The parties reached a settlement in February that involved a $100 million contribution from Gemini. The report outlined that the latest loan from the Winklevoss twins will not go towards this settlement.
Moreover, a lawsuit filed by the US securities market regulator named both Gemini and Genisis for offering and selling crypto lending products under Gemini Earn, which are alleged to be unregistered securities. Furthermore, the Commodity Futures Trading Commission moved against Gemini with an allegation of misleading the regulator for the launch of the first US-regulated Bitcoin futures contract.
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