(Bloomberg) - Billionaires Tyler and Cameron Winklevoss have dipped into their own pockets to prop up their crypto exchange Gemini Trust Co., which has suffered numerous setbacks during the year-long digital asset market downturn.
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The twins recently made a $100 million loan to Gemini, according to two people familiar with the matter, who did not want to be identified discussing private information. The move came after Gemini informally sought funding from outside investors over the past few months without reaching any agreement, according to three people. Gemini and the Winklevoss twins did not respond to requests for comment.
Venture capital funding for crypto startups plummeted following the collapse of crypto exchange FTX and downturns in the tech and crypto industries, dropping 80% to 2.4 billion dollars in the first quarter compared to the same period last year, according to data from research firm PitchBook. Gemini has had its own issues during the crypto bear market, a stark contrast to when it raised $400 million at a valuation of $7.1 billion in November 2021.
The fallout from the FTX implosion led to the bankruptcy of crypto lender Genesis Global Holdco, badly hurting Gemini in the process. Genesis Global was Gemini's sole partner on its Gemini Earn loan product, and when Genesis froze withdrawals in November, it forced Gemini to suspend redemptions on Earn accounts. The move left $900 million in client cash in limbo and sparked a heated argument between the Winklevoss twins and Barry Silbert, chief executive of Digital Currency Group, Genesis' parent company. In February, the two sides reached an agreement in principle to resolve the dispute, under which Gemini would pay up to $100 million. The Winklevoss loan will not be used for that, but rather to fund operations, a person familiar with the matter said.
The Securities and Exchange Commission sued Gemini and Genesis, alleging the Earn product violated securities laws. Gemini is also facing legal action from the Commodity Futures Trading Commission, which alleges that Gemini misled the derivatives regulator in an effort to launch the first regulated Bitcoin futures contract in the United States. In January, Gemini laid off 10% of its workforce, adding to a wave of layoffs in June. The exchange also lost its chief operating officer, Noah Perlman, who went on to compete with Binance as chief compliance officer.
Gemini's market share of global spot trading volume fell to 0.13% from 0.20% a year ago, according to researcher CryptoCompare. Gemini recorded a cash trading volume of $13 million in the past 24 hours. Coinbase, the largest crypto exchange in the United States, made around $660 million over the same period, per CoinMarketCap.
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