Gemini Withdrew $282M Worth of Earn Users’ Funds before Genesis Collapse

In August of the previous year, cryptocurrency exchange Gemini transferred $282 million from its Earn users’ funds to its liquidity reserve, as stated by the company in response to a New York Post article published on Thursday, September 28.

The article had claimed that the Winklevoss founders, Cameron and Tyler Winklevoss, withdrew over $280 million, whether from corporate or personal funds, as per an unnamed source cited by the Post. Gemini took to the social media platform X (formerly Twitter) to label the story as “misleading” and “pure fantasy”.

In its recent post, the Gemini Trust Co noted:

“Everything the Post alleges in its story is the exact opposite. The $282 million that was withdrawn from Genesis in August 2022 was in fact Earn users’ money.”

Gemini has chosen to bolster its liquidity reserves in response to the market turbulence experienced during the summer of 2022, which included significant events like the TerraUSD stablecoin’s collapse. The crypto exchange added:

“As a result of our risk management, Earn users had $282 million less exposure to Genesis when Genesis halted redemptions on November 16, 2022.”

Genesis, a subsidiary of Digital Currency Group (also the parent company of CoinDesk), halted customer withdrawals when crypto exchange FTX unexpectedly collapsed in November of last year. This action resulted in the freezing of assets belonging to Gemini’s Earn customers.

Genesis subsequently filed for bankruptcy in January 2023. Recently, Gemini has expressed concerns that the bankruptcy plan proposed by Genesis will not adequately compensate its customers, leaving them far from receiving the actual value of the money owed to them.

Gemini vs Digital Currency Group

Last month in August, Genesis’s parent firm Digital Currency Group (DCG) filed a motion to dismiss a lawsuit filed by crypto exchange Gemini.

In the previous month, Gemini, a cryptocurrency exchange, voiced their intent to recuperate funds due to what they described as “DCG’s and Silbert’s false, misleading, and incomplete representations and omissions to Gemini”. They also pointed to their involvement “in encouraging and facilitating Genesis’s fraud against Gemini”.

In the motion, DCG CEO Barry Silbert and legal representatives emphasize that Gemini’s lawsuit, filed last month, is seen as a part of an ongoing “public relations campaign”. They claim that this campaign has been targeting the firm through social media with “personal, vicious, and false” allegations.