Gemini has confirmed it withdrew $282 million of its Earn users funds from the bankrupt crypto lender Genesis in August last year into its liquidity reserve, according to a Sept. 28 statement.
The exchange made this statement in response to a New York Post report alleging that the crypto platform’s co-founders, Tyler and Cameron Winklevoss, had secretly withdrawn over $280 million from the bankrupt lender.
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According to the report, it was “unclear if the withdrawn funds were Gemini corporate assets or from the Winklevoss twins’ personal crypto stash.” However, the New York Post stated that “the sum did not include any Gemini customer funds.”
In response, Gemini stated that the report was “completely misleading,” adding that “everything the Post alleges in its story is the exact opposite.”
Gemini justified its $282 million withdrawal by pointing to the terms of the Gemini Earn Program, which allowed it to create a “liquidity reserve” for the benefit of Earn users. Gemini said:
“Amidst the broad market turmoil in the summer of 2022, we decided to increase the liquidity reserve. As a result, we pulled back $282 million of Earn users’ funds from Genesis on August 9, 2022 and held those funds in the liquidity reserve for their benefit.”
The exchange explained that the withdrawal helped its users have $282 million less exposure to Genesis when the bankrupt lender halted redemptions in November last year.
Continues public dispute with Digital Currency Group
Gemini vehemently dismissed the Post’s report as “pure fantasy,” suggesting it was a calculated attempt to bolster the reputation of Digital Currency Group (DCG), the parent company of Genesis, and its CEO, Barry Silbert.
Gemini said:
“[The report was] pre-packaged and handed to the New York Post by BarrySilbert and DCG in another brazen attempt to manipulate public opinion, Earn users, and distract from their fraudulent behavior that is currently under criminal investigation.”
This continues the highly publicized dispute between Gemini and DCG, which began when Genesis filed for bankruptcy. According to Gemini, DCG has been aware of the lender’s insolvency since 2022 but chose not to disclose this critical information to investors.
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