Billionaire Winklevoss twins are in hot water after their crypto exchange Gemini is owed $900million from broker that lost out during FTX's disastrous crash

  • In one of the biggest crypto blowups of all time, the Bahamas-based exchange filed for bankruptcy in Delaware last month, after being valued at as much $32b
  • The twins - perhaps best known for their protracted legal battle with billionaire Mark Zuckerberg - were among many to record losses when the platform fell 
  • Their company is owed the nearly $1billion sum by Genesis, a crypto broker that has seen billions evaporate from its evaluation after the sudden Chapter 11 filing
  • The Harvard grads have since created a committee of creditors to try to recover their lost investment - from Genesis and parent company Digital Currency Group

Billionaire Bitcoin investors Cameron and Tyler Winklevoss are reportedly in the red $900million after FTX's monumental crash last month, which left more than a million other creditors scrambling to recover assets.

In one of the biggest crypto blowups of all time, the Bahamas-based exchange filed for bankruptcy in Delaware last month, after being valued at as much $32 billion.

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That said, the statuesque twins - perhaps best known for their protracted legal battle with fellow billionaire Mark Zuckerberg as seen in The Social Network - were among many to record losses when the platform fell, a new report has revealed, with the losses affecting the brothers' crypto startup Gemini specifically.

According to The Financial Times, the Winklevosses - who were quick to capitalize on a $20million settlement from Facebook to become one of the earliest adopters of cryptocurrency - are owed the nearly $1billion sum by Genesis, a crypto broker that has seen billions evaporate from its evaluation after the sudden Chapter 11 filing.

The Harvard grads have since created a committee of creditors to try to recover their lost investment - from both Genesis and its parent company Digital Currency Group.

Meanwhile, Sam Bankman-Fried, the 30-year-old founder of the embattled exchange - once hailed as the 'poster boy for crypto - could face criminal charges for his firm's unprecedented crash, and is currently being investigated by federal officials.

Cameron and Tyler Winklevoss are reportedly in the red $900million after FTX's monumental crash last month, which left more than a million other creditors scrambling to recover assets

The 41-year-old former rowers are now among the many millions of creditors who would like a strong word with Bankman-Fried, who has not sought to make right on his firm's failure.

According to the Times' report, it's the brothers' crypto exchange that's specifically owed. 

Founded in 2014 in the wake of the Facebook settlement - which was given to the 41-year-old former rowers after they helped lay the groundwork for Zuckerberg's social network - the company, called Gemini, reportedly lent $900million in digital coins to Genesis in return for a fixed stream of returns.

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However, following FTX's recent financial flop, Genesis has said that it does not have the necessary funds to make good on those returns, citing 'unprecedented market turmoil' stemming from the collapse. 

According to Genesis, the company currently has about $2.8 billion in active loans, while its parent company DCG is in debt to the tune of $2 billion.

Shockingly, $1.7 billion of that sum is owed to its own subsidiary, Genesis, illustrating the firm's dire financial situation.

Meanwhile, Sam Bankman-Fried, the 30-year-old founder of the embattled exchange - once hailed as the 'poster boy for crypto - could face criminal charges for his firm's unprecedented crash, and is currently being investigated by federal officials

The company has since scrambled to raise funds to appease the millions of customers whose money is locked up on trading and lending platform, and has hired investment banking boutique Moelis & Co to help it explore its options, the Times reported.

The paper's report, published Sunday, followed a previous story that that a group of customers using Gemini's Earn program, which is tied to Genesis, had still been owed $900 million after Genesis' lending unit halted withdrawals on November 16.

Less than a week earlier, when it became apparent that FTX was on track for financial ruin, the company took to Twitter in a gesture of 'transparency' to notify users that the firm had $175million in funds locked in their FTX trading account.

The 41-year-old former rowers are now among the millions of creditors who would like a strong word with Bankman-Fried, who has left millions of users in the red following his firm's failure

'This does not impact our market-making activities,' the company wrote on November 10.

'Furthermore, our operating capital and net positions in FTX are not material to our business,' the firm wrote at the time, less than 24 hours before Bankman-Friedman would file for Chapter 11 bankruptcy in Delaware. 

'Circumstances surrounding FTX have not impeded the full functioning of our trading franchise,' one tweet from Genesis read.

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'To reemphasize, Genesis has no ongoing lending relationship with FTX.'

Less than a week earlier, when it became apparent that FTX was on track for financial ruin, the company took to Twitter in a gesture of 'transparency' to notify users that the firm had $175million in funds locked in their FTX trading account
'Furthermore, our operating capital and net positions in FTX are not material to our business,' the firm wrote at the time, less than a day before Bankman-Friedman would file for bankruptcy

In the weeks since, Genesis, which is run by billionaire Barry Silbert, released a statement revealing that it had 'begun discussions with potential investors and our largest creditors and borrowers, including Gemini and DCG [Digital Currency Group], to agree on a solution that shores up our lending business' overall liquidity and addresses clients' needs.'

Last week, Silbert told investors that DCG had separately borrowed $575million from Genesis 'on an arm's length basis' to fund undisclosed investments and share buybacks from non-employee shareholders.

The Times further revealed last week that some of DCG's borrowing was used to fund its investments into another on of its subsidiaries, Grayscale, casting even more doubt on the company's - and therefore Genesis' - financial health.

On Monday, one half of the Winklevoss duo weighed in on the ongoing controversy, writing to Genesis - which has $2.8 billion in active loans - 'returning your funds is our highest priority and we are operating with the utmost urgency'

On Monday, one half of the Winklevoss duo weighed in on the ongoing controversy.

Cameron, the younger of the siblings by some minutes, wrote to Genesis: 'Returning your funds is our highest priority and we are operating with the utmost urgency.'

Representatives for the US attorney’s office, meanwhile, are currently investigating FTX for fraud, for which Bankman-Fried can be held liable.

Timeline of the rapid rise and swift downfall of crypto exchange FTX

Cryptocurrency exchange FTX has collapsed.

Here is a history of FTX since its foundation in 2019:

2019:

May - Former Wall Street trader Sam Bankman-Fried and ex-Google employee Gary Wang founded FTX, the owner and operator of FTX.COM cryptocurrency exchange.

2020:

August - FTX acquired mobile portfolio tracking application, Blockfolio for $150 million.

2021:

July - A $900 million funding round valued FTX at $18 billion.

September - FTX signed a sponsorship deal with Mercedes' Formula 1 team.

October - FTX raised capital at a valuation of $25 billion from investors including Singapore's Temasek and Tiger Global.

2022:

Jan. 27 - FTX's U.S. arm said it was valued at $8 billion after raising $400 million in its first funding round from investors including SoftBank and Temasek.

Jan. 31 - FTX raised $400 million from investors including SoftBank at a valuation of $32 billion.

Feb. 13 - Larry David stars in Super Bowl commercial for FTX

June 4 - FTX signed a reportedly $135 million sponsorship deal for naming rights of the Miami Heat's home court.

July 1 - FTX signed a deal with an option to buy embattled crypto lender BlockFi for up to $240 million.

July 22 - FTX offered a partial bailout of bankrupt crypto lender Voyager Digital. Voyager called it a 'low-ball bid'.

July 29 - FTX said it won full approval to operate its exchange and clearing house in Dubai.

Aug. 19 - A U.S. bank regulator ordered crypto exchange FTX to halt 'false and misleading' claims it had made about whether funds at the company are insured by the government.

Sept. 9 - FTX's venture capital fund said it would buy a 30% stake in SkyBridge Capital.

Nov. 2 - Crypto news website CoinDesk reported a leaked balance sheet that showed Alameda Research, Bankman-Fried's crypto trading firm, was heavily dependent on FTX's native token, FTT. 

Nov. 6 - Binance CEO Changpeng Zhao said his firm would liquidate its holdings of FTT due to unspecified 'recent revelations'.

Nov. 7 - Bankman-Fried said 'FTX is fine. Assets are fine'.

Nov. 8 - FTT collapses by 72% as clients swamp the exchange with withdrawal requests. Binance offers a potential bailout in a non-binding deal.

Nov. 9 - Binance backs out of the rescue plan, saying: 'As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.' 

Nov. 11 - Bankman-Fried resigns as CEO and FTX files for Chapter 11 bankruptcy 

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