Gemini, the renowned cryptocurrency exchange, recently found itself in the midst of controversy. A New York Post report accused the platform’s co-founders, Tyler and Cameron Winklevoss, of secretly withdrawing a staggering $280 million from the bankrupt lender, Genesis. These allegations raised questions about the integrity of Gemini and its handling of user funds. However, Gemini wasted no time in addressing these claims and providing a detailed response.
Gemini swiftly issued a statement categorically denying the allegations made in the New York Post report. The exchange deemed the report “completely misleading,” stating that “everything the Post alleges in its story is the exact opposite.” It clarified that the withdrawn funds were not Gemini customer funds, as wrongly suggested. Rather, the $282 million had been withdrawn in August 2022 from the bankrupt lender and transferred into Gemini’s liquidity reserve.
Gemini justified its decision to withdraw the funds based on the terms of its Gemini Earn Program. The program allowed the exchange to create a “liquidity reserve” intended to benefit Earn users. The exchange explained that, in response to the volatile market conditions of the summer of 2022, it had decided to increase the liquidity reserve. As a result, it pulled back $282 million of Earn users’ funds from Genesis on August 9, 2022, and held them in the liquidity reserve for their benefit. This move aimed to reduce exposure to Genesis, given the lender’s subsequent suspension of redemptions in November the same year.
Gemini vehemently dismissed the New York Post’s report as “pure fantasy” and insinuated ulterior motives behind its publication. The exchange suggested that the report was a calculated attempt to bolster the reputation of Digital Currency Group (DCG), the parent company of Genesis, and its CEO, Barry Silbert. According to Gemini, DCG had known about the lender’s insolvency since 2022 but deliberately chose not to disclose this crucial information to investors. By pointing out DCG’s awareness of Genesis’ financial troubles, Gemini portrayed itself as a responsible and transparent entity, dedicated to safeguarding the interests of its users.
In light of the allegations against Gemini, the exchange promptly addressed the issue and provided a comprehensive response to set the record straight. It clarified the purpose and justification for the $282 million withdrawal from Genesis, emphasizing its commitment to user protection and the prudent management of funds. While controversies may arise in the world of cryptocurrency, Gemini’s swift and transparent response has demonstrated their commitment to maintaining trust and credibility within the crypto community.
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