Winklevoss twins owed $900m by broker that lost out in FTX crash

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

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

That said, the statuesque twins, perhaps best known for their protracted legal battle with fellow billionaire Mark Zuckerberg as seen on The Social Network, were among the many who posted losses when the platform crashed, a new report has revealed, and the losses affected siblings. Specifically, the cryptocurrency startup Gemini.

According to The Financial Times, the Winklevosses, who rushed to capitalize on a $20 million Facebook deal to become an early adopter of the cryptocurrency, are owed nearly $1 billion from Genesis, a broker of crypto that has seen billions evaporate from its assessment after the sudden filing of Chapter 11.

Harvard graduates have since created a committee of creditors to try to recoup their lost investment, both from 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 cryptocurrency,” He could face criminal charges for his company’s unprecedented accident and is currently under investigation by federal officials.

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

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

According to the Times report, it is the brothers’ crypto exchange that is specifically owed.

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

However, following FTX’s recent financial failure, Genesis has said it does not have the funds necessary to enforce those returns, citing “unprecedented market turbulence” stemming from the crash.

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

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

Meanwhile, Sam Bankman-Fried, the 30-year-old founder of the embattled exchange once hailed as the “poster boy of cryptocurrency,” could face criminal charges over the unprecedented collapse of his company, and is currently under investigation for federal officials.

Since then, the company has scrambled to raise funds to appease the millions of clients whose money is locked up on the trading and lending platform, and has enlisted investment banking boutique Moelis & Co to help explore its options, the Times reported.

The newspaper report, published Sunday, followed an earlier story that a group of customers using the Gemini’s Earn program, which is linked to Genesis, were still owed $900 million after Genesis’ lending unit stop the withdrawals on November 16.

Less than a week earlier, when it became apparent that FTX was on the road to financial ruin, the company took to Twitter in a gesture of “transparency” to notify users that the company had $175 million in funds locked up in its trading account. from FTX.

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

“This does not affect our market making activities,” the company wrote on November 10.

“In addition, 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 filed for Chapter 11 bankruptcy in Delaware.

“The circumstances surrounding FTX have not prevented the full operation of our business franchise,” a Genesis tweet read.

“To re-emphasize, Genesis does not have an ongoing loan relationship with FTX.”

Less than a week earlier, when it became clear that FTX was on the road to financial ruin, the company took to Twitter in a gesture of “transparency” to notify users that the company had $175 million in funds locked up in its trading account. from FTX.

“In addition, 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 filed for bankruptcy.

In the weeks since, Genesis, led by billionaire Barry Silbert, released a statement revealing that it had “began discussions with potential investors and our largest creditors and borrowers, including Gemini and DCG.” [Digital Currency Group]to agree on a solution that bolsters the overall liquidity of our lending business and addresses client needs.’

Last week, Silbert told investors that DCG had separately borrowed $575 million from Genesis “at arm’s length” to finance undisclosed investments and share buybacks from non-employee shareholders.

The Times further revealed last week that part of DCG’s loans were used to finance its investments in another of its subsidiaries, Grayscale, raising further questions about the financial health of the company, and therefore Genesis.

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

Cameron, the youngest of the brothers by a few minutes, wrote to Genesis: “The return of your funds is our highest priority and we are operating with the utmost urgency.”

Meanwhile, representatives from the US Attorney’s office are investigating FTX for fraud, for which Bankman-Fried may be held responsible.