Gemini Refutes Alleged Malicious Description of $218 Million Genesis Transfer

Updated: 30 September 2023

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In a recent development, the cryptocurrency exchange Gemini has contested the portrayal of a $282 million transaction involving crypto bank Genesis. An article previously published by the New York Post insinuated a suspicious tone, suggesting that the Winklevoss twins, founders of Gemini, made a covert withdrawal of this vast amount shortly before Genesis ceased customer withdrawals, leaving Gemini Earn users in a lurch.

Gemini has vehemently countered this narrative. Through a statement on Twitter, they declared such portrayals as “sheer make-believe.” They clarified that the $282 million was essentially Earn funds redirected to a liquidity reserve. Furthermore, allegations were raised against DCG, the parent company of Genesis, and its CEO Barry Silbert, implying that they might have orchestrated the original story in the Post.

We are disappointed that the @nypost has chosen to recklessly publish a completely misleading story about the Gemini Earn program. 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 The $282 million that was withdrawn from Genesis in August 2022 was in fact Earn…

— GeminiTrustCo (@GeminiTrustCo) September 28, 2023

It’s curious how a move that essentially shielded Earn users by hundreds of millions is being misinterpreted so grievously.

For clarity, Gemini’s website has a dedicated page explaining the liquidity reserve’s purpose for Earn. The reserve helps expedite the process of fulfilling loan callbacks and withdrawal demands by retaining a certain fraction of funds that are earmarked for lending. On social media, Gemini illuminated that the large withdrawal from Genesis was a strategic step to bolster the reserve, subsequently minimizing potential risks.

In their defense, Gemini stated, “It’s curious how a move that essentially shielded Earn users by hundreds of millions is being misinterpreted so grievously.” They further criticized the reportage, dubbing it a transparent effort to sway public sentiment.

This ongoing feud, widely discussed and speculated upon in the media, is just the most recent episode in the contentious narrative involving Gemini, Genesis, and DCG regarding the Earn customers’ funds.

Gemini Earn, High Interest Provider: Bankrupt

Elaborating on the backdrop, Gemini Earn was a service rendered by the exchange allowing its clientele to garner as much as 8% interest on their cryptocurrency lent to Genesis. However, following the FTX debacle, Genesis halted customer withdrawals and subsequently declared bankruptcy at the year’s start.

Gemini’s stance is that Genesis and DCG are indebted to Earn users to the tune of $900 million. Although it seemed an amicable resolution was on the horizon in February, it fell apart when DCG allegedly defaulted on a $630 million transaction, as per Gemini’s records.

The tumult escalated when Gemini launched a lawsuit against both DCG and Silbert in the middle of the year, accusing them of deceit and propagating “erroneous, deceptive, and incomplete narratives” about Genesis’ financial standing. Recently, DCG and Silbert made moves to quash the lawsuit, asserting their minimal involvement with the Earn initiative. Their legal team posited that Silbert’s statements weren’t demonstrably false. In response to the allegations, DCG and Silbert’s legal counsel remarked that the Winklevoss brothers have been leading a “Twitter-centric smear campaign,” presumably as a diversionary tactic.