The crypto exchange owned by the Winklevoss twins is trying to recover $900 million from a cash-strapped crypto broker that was gutted following the collapse of FTX, according to a report.
New York-based Gemini – which Tyler and Cameron Winklevoss launched after settling their famous beef with former Harvard classmate Mark Zuckerberg over who founded Facebook – spearheaded a partnership for customers in its “earn” program in which Gemini lent its coins to crypto broker Genesis in exchange for a fixed stream of returns.
But Genesis said it couldn’t afford to make all of its returns last month after facing “unprecedented market turbulence” following the collapse of FTX, according to the Financial Times.
The Winklevosses created a committee of creditors to try to recover their $900 million investment from Genesis and its parent company, Digital Currency Group (DCG).
The Winklevoss twins founded Gemini in 2014 and became the first licensed Ethereum exchange in the United States.
Meanwhile, Genesis is trying to raise emergency funds to pay off its debts and has hired investment bank Moelis & Co to help figure out how, the FT reported.
Genesis has about $2.8 billion in active loans, according to its website. Its parent company DCG is $2 billion in debt, of which $1.7 billion is owed to its own subsidiary, Genesis.
DCG was founded in 2015 and is one of the biggest investors in the crypto industry, reaching a valuation of $10 billion last year.
Genesis, which is run by billionaire Barry Silbert, lost $1.1 billion over the summer on a loan to imploded hedge fund Three Arrows Capital. DCG assumed the liabilities of Genesis, subsequently owing Genesis $1.1 billion, according to FT.
FTX, founded by Sam Bankman-Fried, filed for bankruptcy protection on November 11 in the most publicized crypto explosion to date, after traders withdrew billions from the platform in three days and rival exchange Binance dropped a bailout deal.