On Thursday, crypto exchange Gemini stated that last year in August, it had withdrawn the sum of $282 million for the benefit of its clients from crypto bank Genesis.
This was in response to an article in the New York Post, which had referred to the transaction in question in a rather ominous way.
The story
Published a day earlier, the story had claimed that millions of dollars had been withdrawn secretly by Gemini co-founders Tyler and Cameron Winklevoss.
As per the story, the withdrawals had happened months before customer withdrawals were suspended by Genesis, while customers of Gemini Earn were left with frozen funds.
Taking to X, Gemini said that these revelations were nothing more than ‘pure fantasy’ and added that the Earn funds worth $282 million had been placed in a liquidity reserve.
Gemini also asserted that the story in the Post had been planted by Genesis’ parent company, DCG, and its chief executive, Barry Silbert.
The Gemini website has an agreement page that refers to the Earn liquidity reserve as a way for the company to fund the withdrawal and loan callback requests more quickly.
This is accomplished by setting aside a portion of customer funds to be loaned. The page says that Gemini is authorized to make adjustments to the reserve.
The description
According to Gemini, the withdrawal worth $282 million they had made from Genesis was to increase the reserve, which reduced the company’s exposure.
Gemini asserted that their decision had been aimed at protecting Earn users, but it had been twisted. It added that the article in the Post was just another way of manipulating public opinion.
The tabloid-fueled drama is just the latest stone that has been thrown publicly in the rather acrimonious back-and-forth happening between Genesis, Gemini, and DCG related to funds belonging to Earn customers.
Gemini Earn was a service that the crypto exchange provided to its clients in which they were able to loan their crypto to Genesis for earning interest of about 8%.
Customer withdrawals had been suspended by Genesis when the FTX exchange collapsed and in January this year, it ended up filing for bankruptcy.
The background
DCG and Genesis owe almost $900 million to the Earn users. After a number of legal threats, they reached a repayment agreement back in February.
However, Gemini said that the agreement fell through after DCG had failed to make a payment worth $630 million.
Gemini filed a lawsuit in July against Silbert and DCG in which they were accused of making misleading, false, and incomplete representations about Genesis’ financial health.
Silbert and DCG had tried to get the lawsuit dismissed last month because they had nothing to do with the Earn program and Silbert had not made any fraudulent representation.
Silbert and DCG also said in a letter that the Winklevoss twins had conducted a character assassination campaign on Twitter because they were trying to divert the attention of their irate customers and manipulate public opinion.