Cameron and Tyler Winklevoss, renowned as Bitcoin billionaires, are set to give back $1.1 billion to customers of their cryptocurrency exchange, Gemini. This resolution comes as part of a settlement with the New York State Department of Financial Services (NYFDS), marking a significant development in the ongoing legal saga.
NY Lawsuit and Sloppy Fund Handling
The legal tussle began when New York filed a lawsuit against Gemini in October, accusing the platform of inadequately channeling user funds to Genesis Global Capital. The cryptocurrency lending firm, which faced a downfall in January, received funds through Gemini’s program called Gemini Earn. Promising users an 8% “low-risk” return, the program turned out to be high-risk, with Genesis having ties to the collapsed cryptocurrency exchange FTX in late 2022.
NYFDS Statement on Settlement
In a statement announcing the settlement, the NYFDS emphasized Gemini’s failure to conduct sufficient due diligence on Genesis Global Capital. This lack of diligence, coupled with the failure to maintain adequate reserves throughout the Gemini Earn program, led to significant reputational and monetary harm. Over 200,000 Earn customers, including nearly 30,000 New Yorkers, remain unable to access their virtual currency as a result.
Twins’ Journey: From Facebook Lawsuit to Cryptocurrency Evangelists
The Winklevoss twins gained public attention through their legal battle with Facebook founder Mark Zuckerberg, which resulted in a $20 million settlement in Facebook stock. This stock, valued at $200 million when Facebook went public, became the foundation of their cryptocurrency venture.
Investing a portion of their windfall into Bitcoin when it traded at $10 apiece, the twins witnessed a substantial increase in Bitcoin’s value, with the cryptocurrency now exceeding $60,000 per coin. Despite the legal setback, as of February 29, Cameron and Tyler Winklevoss ranked 2107th and 2108th, respectively, on Forbes’s list of the wealthiest individuals, each boasting a net worth of $1.4 billion.
Gemini’s Role and Cryptocurrency Advocacy
The twins launched Gemini Trust Company in 2014, with the Gemini exchange commencing operations in 2015. Evolving into cryptocurrency evangelists, they utilized their fortune to influence Wall Street institutions to embrace cryptocurrency investments. Additionally, their political influence was felt through significant campaign contributions during the 2018 U.S. gubernatorial elections, supporting candidates like New York’s Andrew Cuomo and California’s Gavin Newsom.
In a 2019 interview, the twins emphasized the importance of trustworthiness in the cryptocurrency space, promoting their marketing campaign, “The revolution needs rules.” Tyler Winklevoss stated, “There are exchanges like Gemini that are trying to do it the right way and afford consumer protection and standards and safety that you would expect and require from any financial institution.”
As the Winklevoss twins navigate this settlement, the cryptocurrency community watches closely, anticipating the potential impact on their rankings and the broader implications for Gemini’s reputation.
