Winklevoss twins owed $900M by crypto broker as FTX contagion spreads

The crypto exchange owned by the Winklevoss twins is trying to recoup $900 million from a cash-strapped crypto broker that has been gutted in the wake of the FTX collapse, according to a report. 

New York-based Gemini — which Tyler and Cameron Winklevoss started after settling their famous beef with ex-Harvard classmate Mark Zuckerberg over who founded Facebook — ran a partnership for customers in its “earn” program in which Gemini lent its coins to the crypto broker Genesis in return for a fixed stream of returns.

But Genesis said it could not afford to make good on all of its returns last month after it faced “unprecedented market turmoil” as a result of the FTX collapse, according to the Financial Times.

The Winklevosses have created a committee of creditors to try to reclaim 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 US-based licensed Ethereum exchange.

Meanwhile, Genesis is trying to raise emergency funds to pay off its debts, and has hired the 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 in $2 billion worth of debt, $1.7 billion of which 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 $10 billion valuation 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 took on Genesis’s liabilities, subsequently owing $1.1 billion to Genesis, according to FT.

FTX, founded by Sam Bankman-Fried, filed for bankruptcy protection on Nov. 11 in the highest-profile crypto blowup to date, after traders pulled billions from the platform in three days and rival exchange Binance abandoned a rescue deal.