DOUBLE TROUBLE
‘Winklevi’s $282M pre-crash withdrawal
Cameron and Tyler Winklevoss secretly withdrew more than $280 million held by their crypto company’s bank — mere months before the firm’s collapse left the twins’ customers unable to access their deposits, The Post has learned.
The Winklevoss twins, best known for their bitter feud with Harvard classmate Mark Zuckerberg over Facebook, have lately been embroiled in another nasty legal battle — this time with billionaire Barry Silbert, whose company Digital Currency Group owns the now-bankrupt crypto bank Genesis.
The twins are co-founders of Gemini, a once-rising digital-currency exchange that has been plagued this year by layoffs and plunging trading volume. Some $900 million in Gemini customer deposits were frozen last Nov. 16, after Genesis was exposed to the meltdown of FTX and forced to suspend withdrawals.
Sudden pullout
The fight between the Winklevoss twins and Silbert is centered around Gemini Earn — an interestbearing account program that they billed to customers as a way to earn 8% annual interest on their digital currency deposits.
The twins’ company Gemini yanked money from Genesis, the lender for the Earn program, on Aug. 9 of last year, according to a review of the internal emails and documents obtained by The Post and interviews with sources familiar with the matter.
It is unclear if the withdrawn funds were Gemini corporate assets or from the Winklevoss twins’ personal crypto stash. Notably, the sum did not include any Gemini customer funds.
One document included a balance sheet showing Gemini deposits in Genesis had declined by roughly $176 million between Aug. 5 and Aug. 10 of last year. The five-day window included a $282 million withdrawal, which was partially offset by customer deposit inflows and fluctuations in cryptocurrency prices, sources said.
A second document, an email dated Aug. 8, 2022, a day before the withdrawal, detailed the Winklevosses’ request and contained a full breakdown of the $282 million figure. The sum included 3,120 bitcoins, 18,060 ether and more than 142 million units of Gemini’s “stablecoin,” pegged to the dollar.
The tally also included more than 49.6 million units of dogecoin, the canine-themed meme currency favored by Tesla boss Elon Musk, and several other digital currencies. At the time, doge units were worth about six cents each.
“They pulled out their own money, whether that’s corporate funds or their own personal, only a few months before Genesis announced they were putting up the gates and customers would not be able to withdraw their assets,” one source said.
“They decided they were comfortable for the Earn customers but not comfortable for themselves,” the source added.
Gemini and the Winklevoss twins did not return requests for comment. DCG declined to comment.
What they knew
While it’s not known why they withdrew the funds, the twins’ move to pull their money, months before Genesis suspended customer withdrawals, raises questions about what they knew in August 2022 and could undercut their claims in a pending lawsuit that they were unaware of the extent of the lender’s financial woes.
In July, the Winklevoss twins sued Silbert and Digital Currency Group. The complaint alleged Silbert provided a “false, misleading, and incomplete representation” of Genesis’s financial health.
The twins said DCG assured them it had backstopped Genesis during a liquidity crunch that emerged earlier in 2022, when the lender lost $1.1 billion on a loan to the doomed crypto hedge fund Three Arrows Capital.
In reality, the suit asserts, Silbert’s firm had merely provided a promissory note — essentially a corporate IOU — rather than a cash infusion. The brothers added that they tried to pull out of the Earn partnership in mid-October of 2022, only for Silbert to convince them not to do so during a face-to-face meeting.
“In direct reliance on Silbert’s misrepresentations, Gemini elected to delay the termination of the Gemini Earn Program — and not to explore the possibility of pursuing more rapid termination or other relief, as Gemini would have done if Silbert had stated the truth,” the suit said.
DCG has denied the accusations of wrongdoing in Gemini’s lawsuit, and filed a motion to dismiss the suit.
Because the debate over whether cryptocurrency products are securities is still being decided in various court cases, the legality of the twins’ withdrawal is open to interpretation, according to John Coffee, an expert on securities law.