Winklevoss twins’ crypto exchange is in trouble

After the Hollywood blockbuster “The Social Network” hit theaters worldwide in 2010, everyone knew Tyler and Cameron Winklevoss. The film is about the rise of Facebook – which the twins believe was actually their doing. They accused Facebook CEO Mark Zuckerberg of having ideas. A years-long legal battle ensued, which ultimately resulted in a settlement. The Winklevoss twins received $65 million.

The defeat in the Facebook dispute was the starting point of a second career for them. In search of new business fields, they invested their money in Bitcoin early on. At the time, the cryptocurrency was still trading at $120. Today, despite the cryptocrash, the brothers are sitting on private assets of more than a billion dollars each. And not only that: with their crypto exchange Gemini, they have made a name for themselves in the world of Bitcoin and Co.

But now the Winklevoss twins are in trouble – and more than one. Trouble with investors and now also with the U.S. financial regulator is getting to the crypto billionaires. What happens next is uncertain: Rumors are already circulating in the industry about a possible insolvency.

On Thursday, the U.S. Securities and Exchange Commission (SEC) spoke out and filed a complaint against Gemini. SEC Chairman Gary Gensler accuses the company of violating securities laws. The Winklevoss brothers have announced their intention to take action against the lawsuit.

Tyler Winklevoss called the SEC’s approach “totally counterproductive.” Gemini had been talking about the earn program with the regulator for “over 17 months.”

“They have now made the insinuations that it would take any action. That only came AFTER Genesis stopped payouts on Nov. 16,” Winklevoss said.

Gemini payouts stopped

Specifically, it is about the crypto program “Earn”. This allowed customers to earn interest on crypto deposits through so-called lending. Gemini customers could lend selected tokens to the crypto broker Genesis, which in turn passed them on to hedge funds. Customers were promised interest rates of around seven percent.

Gemini already had to discontinue the program last year. Due to the turmoil in the crypto market – mainly triggered by the collapse of the crypto exchange FTX – the broker partner Genesis could no longer repay the funds. Assets amounting to $900 million are at risk. According to insiders, Gemini’s liabilities total three billion dollars.