THE FALL OF GEMINI EXCHANGE
Gemini is a privately owned cryptocurrency exchange that was founded in 2014 by Tyler and Cameron Winklevoss. They were the ones who sued Mark Zuckerberg for stealing their idea. They got $65 million from that case, with which they bought Bitcoin and also started the exchange. On Gemini, one can buy, sell, and store digital currencies. It also has a mobile app, a payment app, and its own stablecoin, GUSD.
THE RISE OF GEMINI
Gemini went live for US customers in 2015. By the next year, they had expanded their operations into Canada and the United Kingdom. In 2016, they launched the first Bitcoin auction, which is now followed by every crypto exchange. Later in 2016, they expanded into Hong Kong, South Korea, and Japan. Currently, it operates in more than 60 countries worldwide. It gained a lot of trust because it was one of the most regulated cryptocurrency exchanges in the US. The exchange is licensed by the New York State Department of Financial Services (NYDFS) to hold a customer’s digital assets in trust.
During the bull run in February 2021, Gemini partnered with Genesis to offer yield to their customers. Currently, Gemini has 13.6 million users. Their lending process goes like this: Gemini lends money to Genesis, which then lends money to other people. Borrowers return money to Genesis, and Genesis pays it back to Gemini.
PROBLEMS AT GEMINI
- Everything was going great at Gemini. Their customers were making yield on their crypto. There were about $900 million in customer funds in the Gemini Earn program.
- After the FTX collapse on 16th Nov 2022, Genesis stopped withdrawals.
-On the same day, Gemini tweeted that they are working with Genesis to help redeem their customers' funds.
-This caused panic in the market as users withdrew more than $450 million in one day from Gemini.
-On January 2, 2023, Gemini co founder Tyler Winklevoss wrote an open letter to Genesis trading company DCG to resolve the issue,and then on January 10, 2023, he wrote another letter to remove Barry Silbert as the current CEO of DCG.
-Things got even worse on January 13 as the SEC charged Gemini and Genesis for selling unregistered securities.
Gemini holds about $1.5 billion in customer funds. If they will not find any way to resolve the issue it will be deteriorating for the crypto market.