Cameron and Tyler Winklevoss’ Genesis Global Capital and Gemini Trust were accused of marketing unregistered securities by the Securities and Exchange Commission (SEC) on Thursday.
Genesis is part of the Digital Currency Group, while the Winklevosses operate Gemini. In a statement, S.E.C. chairman Gary Gensler stated that the corporations disregarded disclosure standards intended to protect investors.
Cryptocurrency Winklevoss Twins
Gensler stated The charges make it plain to the market and the investing public that crypto lending platforms and other intermediaries must comply with our time-tested securities rules.
According to the SEC, approximately $900 million worth of cryptocurrency was lost by up to 340,000 investors.
The SEC complaint described how investor funds from Gemini Earn were lost. Supposedly, customers were earning interest on funds lent to Genesis through Gemini. Gemini, which was sued by investors at the end of 2022, will deduct a hefty agency charge from the profits destined for Gemini Earn investors.
Read more: Crypto 2023: How is cryptocurrency taxed?
How did we arrive at this situation? The spectacular rise of the Winklevoss brothers in the cryptocurrency industry is examined in this article, along with recent events that resulted in a public conflict between Gemini and DCG and a glaring financial hole at Gemini.
In 2008, the Winklevoss twins received approximately $65 million in cash and Facebook stock for their role in creating the social media powerhouse. In 2012, after creating the family office Winklevoss Capital, the brothers began acquiring substantial Bitcoin holdings.
As of November 2013, the twins owned up to 1% of the main cryptocurrency’s circulating supply.
In 2015, the Winklevoss brothers established Gemini, a New York-licensed cryptocurrency exchange. The platform grew over time and bought the NFT marketplace Nifty Gateway in 2019, in advance of the anticipated NFT market explosion in 2021. As of November 2021, the parent business Gemini Space Station was valued at $7,1 billion.
Cameron and Tyler were dubbed Bitcoin billionaires for the first time in 2017 as documented in Ben Mezrich’s book of the same name after Bitcoin’s price climbed to nearly $20,000, and Forbes currently estimates that each brother is worth $1.1 billion.
Gemini vs. Genesis
The Financial Times revealed in December that Genesis controlled approximately $900 million in consumer funds from the Gemini Earn program.
Cameron Winklevoss claims that Digital Currency Group, which owns Genesis, Grayscale Investments, and other crypto enterprises, is experiencing liquidity issues, despite founder and CEO Barry Silbert’s assurances to investors to the contrary.
Cameron Winklevoss demanded Silbert’s resignation on January 10, alleging that DCG engaged in deception and accounting fraud.
The company responded by branding Winklevoss’s assertions another desperate and unconstructive PR ploy by the Gemini founders, who were solely responsible for operating Gemini Earn and marketing the program to its consumers, according to the company’s statement.
Gemini then declared that it had officially canceled its Earn program, requiring Genesis to return more than $900 million in customer assets, according to Gemini. Gemini and Genesis had managed the initiative in conjunction for nearly two years.