Drama

Gemini's Winklevoss issues a $900M deadline as contagion drama becomes dirty laundry

Snacks / Wednesday, January 04, 2023

Social net worth… The president of US crypto exchange Gemini, Cameron Winklevoss (refresher: sued Mark Zuckerberg over FB's origins), has new public beef. On Monday, Winklevoss accused Barry Silbert, the CEO of crypto conglomerate DCG, of "unconscionable" behavior. Winklevoss says that DCG's crypto-lending subsidiary, Genesis, won't return $900M that belongs to his Gemini customers. He gave Silbert a Sunday deadline to commit to making his customers whole.

  • Salad days: Earlier this year, Gemini customers could authorize the exchange to lend out their crypto to earn interest potentially as high as 8%. Gemini lent that crypto to Genesis, which lent it out again.
  • Pallid haze: After FTX's collapse in November, Genesis paused loan redemptions (aka repayments), leaving Gemini customers' money in limbo.

Crypto lending meets contagion… Crypto is a highly leveraged industry (think: using borrowed assets to make trades). So when big players implode, contagion can spread. Genesis isn't the only crypto lender to freeze up during crypto winter. In June, Celsius paused redemptions on customer loans with advertised yields up to 18% — and filed for bankruptcy a month later. And in August, Singapore-based lender Hodlnaut froze customer withdrawals.

Crypto stopped being polite… and started getting real. Crypto winter and subsequent contagion could deal final blows to the industry's WAGMI ("we're all gonna make it") ethos. Now, at the very real risk of not making it, it's every firm — and customer class-action lawsuit — for itself. Winklevoss' public calling out of Silbert "for the final time" is what happens when the crypto tide goes out and everyone scrambles for a boat.

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