Gemini crypto exchange suspends withdrawals on its interest-bearing accounts as FTX contagion spreads
The collapse of the now-bankrupt crypto exchange continues to roil the industry. In less than 24 hours, four crypto companies including BlockFi, Gemini, SALT, and Genesis have announced new restrictions on withdrawals for their customers.
Winklevoss brothers’ Gemini crypto exchange becomes the third crypto company to suspend customers’ withdrawals as the collapse of FTX contagion spreads across the crypto market
Before noon today, Gemini said it was pausing withdrawals on its interest-bearing Earn accounts as a result of changes to the Genesis lending partner program. In a statement, Genesis said:
“We are working with the Genesis team to help customers redeem their funds from the Earn program as quickly as possible. We will provide more information in the coming days.” The exchange also noted that the change doesn’t impact any other Gemini products and services.
As we reported earlier today, Genesis announced the suspension of redemptions and new loan originations. Genesis said that FTX has “created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity.”
The withdrawals affected Genesis’s lending arm which serves an institutional client base and is known as Genesis Global Capital. According to the company’s website, the unit had $2.8 billion in total active loans as of the end of the third quarter of 2022.
In a tweet, Genesis said: “We recognize how challenging this past week has been due to the impact of the FTX news. At Genesis we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment.”
Gemini was founded in 2015, by brothers Cameron and Tyler Winklevoss, to build a bridge to the future of money. Its goal is to build a world-class digital asset exchange and custodian based in the United States. Gemini dubs itself a next-generation cryptocurrency exchange and a platform for buying, selling, storing, and earning cryptocurrencies including bitcoin and ether, and DeFi (Decentralized Finance) tokens. Gemini also allows customers to buy, sell, and store digital assets.
Gemini provides a simple and secure platform for crypto investors to build their crypto portfolios. The startup also runs a non-fungible token or NFT marketplace for digital art and collectibles which has 375 unique artist collaborations.
According to a story in the New York Times, the Winklevoss brothers bought $11 million worth of Bitcoins in 2013. They soon became crypto evangelists, which led to the creation of the crypto exchange Gemini. Each of the twins is reportedly worth $1.4 billion apiece, according to the Bloomberg Billionaires Index.
The Winklevoss twins are best known for their feud with Facebook founder Mark Zuckerberg over whether he stole the idea for the social networking website from them. The twin brothers are also known for co-founding HarvardConnection (later renamed ConnectU) along with Harvard classmate Divya Narendra.
In 2004, the Winklevoss brothers sued Facebook founder Mark Zuckerberg, claiming he stole their ConnectU idea to create the popular social networking site Facebook.
You can read the entire text of the email below.
We are aware that Genesis Global Capital, LLC (Genesis) — the lending partner of the Earn program — has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days. We are working with the Genesis team to help customers redeem their funds from the Earn program as quickly as possible. We will provide more information in the coming days.
The past week has been an incredibly challenging and stressful time for our industry. We are disappointed that the Earn program SLA will not be met, but we are encouraged by Genesis’ and its parent company Digital Currency Group’s commitment to doing everything in their power to fulfill their obligations to customers under the Earn program. We will continue to work with them on behalf of all Earn customers. This is our highest priority. We greatly appreciate your patience.
This does not impact any other Gemini products and services. Gemini is a full-reserve exchange and custodian. All customer funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time. You can read more here.