Winklevoss twins under fire for $282million withdrawal from crypto bank Genesis before it collapsed
- Cameron and Tyler Winklevoss pulled $282 million of Gemini Earn user funds from crypto bank Genesis before its collapse
- They put the money into a liquid reserve ahead of Genesis freezing $900 million in customer assets
- Gemini users are still furious at the twins for not halting the Earn program altogether
The founders of cryptocurrency exchange Gemini are under fire for quietly pulling $282 million from a bank just months before it froze funds and filed for bankruptcy.
Cameron and Tyler Winklevoss, who famously feuded with Mark Zuckerberg over who founded Facebook, withdrew the money from Genesis in August 2022.
The bank froze up to $900 million in funds linked to customers in Gemini’s Earn program just three months later, before filing for bankruptcy in January.
The withdrawal was first reported by the New York Post which said it was unclear if the funds were corporate assets or the Winklevoss’ personal money, which sparked a harsh response from the twins.
‘We pulled back $282 million of Earn users’ funds from Genesis on August 9, 2022 and held those funds in the liquidity reserve for their benefit,’ they said on X, formerly Twitter.
Tyler (right) and Cameron (left) Winklevoss, creators of crypto exchange Gemini, are under fire for pulling $282 million from Genesis three months before it froze customer assets
The Winklevoss twins revealed the money belonged to customers in Gemini’s Earn program and the withdrawal was to reduce their exposure
‘Amidst the broad market turmoil in the summer of 2022, we decided to increase the liquidity reserve.’
‘In hindsight, this proved to be a wise and prudent decision. As a result of our risk management, Earn users had $282 million less exposure to Genesis when Genesis halted redemptions on November 16, 2022,’ said the twins.
But customers appear to still be unsatisfied with the Winklevoss brothers’ explanation and are questioning why they did not halt the entire program.
‘There’s no good way that Gemini can spin this,’ said Eric Asquith, who is currently locked in arbitration with Gemini after allegedly losing over $1 million.
‘So you had the smarts to withdraw $282 million, but you didn’t halt the Earn program?’
‘You didn’t tell anyone what you were doing. You didn’t disclose to any of the Earn users what was happening. You didn’t warn anyone about what was happening.’
The Gemini Earn program was promoted as a way for investors to earn up to eight percent back on cryptocurrency investments, according to a previous blog post on their website.
Customers are appear to still be unsatisfied with the Winklevoss brothers explanation and are questioning why they did not stop the Earn program
The twins used a $65 million settlement from a lawsuit against Mark Zuckerberg to fund Gemini
Investments from the program were held in the now-bankrupt crypto bank Genesis, owned by billionaire Barry Silbert through Digital Currency Group.
Genesis, the popular cryptocurrency broker, fell into financial trouble after the implosion of Sam Bankman-Fried’s FTX.
The crypto bank froze $900 million in Gemini Earn customer assets after they suffered steep losses from loans it supplied FTX’s now-defunct trading firm Alameda Research and its hedge fund backer Three Arrows Capital.
Genesis officially filed for bankruptcy in January and is working on deals with creditors.
When asked if they are investigating the Winklevoss twins withdrawal, a US Securities and Exchange Commission spokesperson said, ‘The SEC does not comment on the existence or nonexistence of a possible investigation.’