Cryptocurrency exchange Gemini said on Thursday that the firm pulled $282 million last August from crypto bank Genesis for the benefit of its customers, pushing back against an article in the New York Post that described the transaction in a more ominous way.
The story published a day ago claimed Gemini co-founders Cameron and Tyler Winklevoss “secretly withdrew” millions of dollars of funds months before Genesis suspended customer withdrawals—and left Gemini Earn customers with frozen funds.
An unnamed source told the Post the Winklevoss twins had “pulled out their own money, whether that’s corporate funds or their own personal [funds],” while making the choice to leave Earn customer’s funds with the now-bankrupt crypto bank.
The reported revelations are a “pure fantasy,” Gemini said on Twitter, claiming the $282 million pulled was Earn funds diverted to a liquidity reserve. Gemini also claimed DCG, Genesis’ parent company, and its CEO Barry Silbert planted the story in the Post.
An agreement page on Gemini’s website describes the liquidity reserve for Earn as a way for the firm to “more quickly fund your loan callback and withdrawal requests” by holding back a portion of customer funds designated to be loaned.
“You appoint and authorize Gemini to adjust such reserve from time to time,” the page states. On Twitter, Gemini described the $282 million withdrawal from Genesis as an increase to the reserve, which supposedly slimmed the company’s exposure.
“It’s quite ironic that a decision that protected Earn users to the tune of hundreds of millions of dollars has been twisted like this,” Gemini said, calling the article “another brazen attempt to manipulate public opinion.”
The tabloid-fueled kerfuffle represents the latest stone thrown in public over what has been an acrimonious back-and-forth between Gemini, Genesis, and DCG over funds that belonged to Earn customers.
A service offered by the exchange, Gemini Earn allowed its customers to earn up to 8% in interest on crypto loaned out to Genesis. Amid the collapse of FTX, Genesis suspended customer withdrawals and went on to file for bankruptcy in January.
DCG and Gemini did not immediately respond to a request for comment from Decrypt.
Genesis and DCG owe the users of Earn $900 million. After several legal threats were made, a repayment agreement appeared to be reached in February, but it fell through after DCG missed a $630 million payment, according to Gemini.
A lawsuit brought by Gemini against DCG and Silbert in July levied accusations of fraud and “false, misleading, and incomplete representations” about the financial health of Genesis as Gemini sought to terminate Earn.
Last month, DCG and Silbert sought to have the lawsuit dismissed, saying the two had “virtually nothing to do with the Earn program.” And any representations made by Silbert weren’t sufficiently shown to be fraudulent, their lawyers claimed
In a letter supporting the move, DCG and Silbert’s counsel said the Winklevoss twins have engaged in a “Twitter-based character assassination campaign,” trying to divert heat from irate customers and effectively manipulate public opinion themselves.
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- Source: https://decrypt.co/199204/gemini-calls-description-of-218-million-genesis-withdrawal-pure-fantasy
