The Winklevoss twins’ crypto situation is a huge mess
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The Winklevii, or Tyler and Cameron Winklevoss to use their first names, first rose to prominence in the mid-2000s when they filed a lawsuit against Mark Zuckerberg, Meta’s CEO and founder, alleging that he stole their concept for Facebook in the process they were Harvard classmates. The 6-foot-5 boys’ narrative, including the point when Zuckerberg paid them millions to go, was eventually told in the 2010 film The Social Network.
In late 2021, Gemini was booming and cryptocurrency prices hit daily records, giving the identical twins a combined net worth of nearly $7 billion. However, after the Crypto Winter destroyed more than $2 trillion in value from the nascent industry, the worm has turned for the Winklevii. Industry analysts had claimed the party was just beginning.
Although the Winklevii brothers may be known to rowing enthusiasts due to their sixth place finish in the men’s rowing competition at the Beijing 2008 Olympics, the siblings have recently gained notoriety due to cryptocurrency. Prior to the creation of a cryptocurrency exchange, Gemini, in 2014, early Bitcoin adopters took advantage of the digital asset boom of the early 2010s.
The brothers and their old friend, crypto millionaire Barry Silbert, are currently embroiled in a high-profile legal battle over what to do with the assets frozen for more than 340,000 users of Gemini’s Earn platform.
Cameron and Tyler Winklevoss left their privileged upbringing in Greenwich, Connecticut — their father is Howard Winklevoss, a former professor of actuarial science at the prestigious Wharton Business School at the University of Pennsylvania — and moved to the quiet neighborhood of Harvard to study early economics 2000s. A social network called ConnectU was founded by them and their classmate Divya Narendra to connect college students, and they sought the help of a sophomore in computer science named Mark Zuckerberg to develop their website.
Gemini’s recent troubles have impacted hundreds of thousands of people worldwide, and none of this would have been possible without Facebook.
The Winklevii and Narendra claimed that Zuckerberg used their concept for Facebook without permission. They filed a lawsuit in 2004 and finally reached a $65 million arbitration agreement with Meta’s CEO after a four-year court battle.
Through their family business, Winklevoss Capital, the brothers invested their settlement funds in numerous companies. They also made timely investments in Bitcoin, which was a relatively unknown digital currency at the time.
They announced in April 2013 that they had invested $11 million in Bitcoin when the price was below $120. As a result of the investment, a year later they founded Gemini, a cryptocurrency exchange. Everything went according to plan until Crypto Winter 2022. On the day of Gemini’s launch, Tyler Winklevoss spoke to Fortune about his plans to introduce regulation to make cryptocurrencies accessible to regular investors while also appealing to the institutional audience.
Wall Street still doesn’t use Bitcoin, and one goal of Gemini and licensing is to change that, he said. Except for a brief period of instability during the 2018 bear market, the exchange quickly expanded and gained a reputation as a reliable US-based option for cryptocurrency investors. During the rise of Gemini, The Winklevii became one of the first bitcoin billionaires.
But as the cryptocurrency craze grew and the two made fortunes, they started investing in riskier things. Nifty Gateway, an NFT marketplace launched by Gemini in 2018, was quickly overtaken by the competition and faced security issues before being included in Samsung’s NFT platform. In September 2021, Cameron Winklevoss also told Fortune that he had made a – shall we say unique – investment in a startup that was working to revive woolly mammoths to help fight climate change. He said he’s seen the company make money through TV ads or “even parks for extinct animals like Jurassic Park.”
The Winklevii launched Gemini’s Earn platform earlier this year, their most significant venture to date. The cryptocurrency lending company promised consumers they could cash in their funds “anytime” and guaranteed tempting returns of “up to 7.4%” on crypto deposits. In contrast, a typical American savings account today only pays a 0.2% yield. At the launch, Tyler Winklevoss stated in a press release that “today’s investors are realizing that a smart, broad portfolio includes crypto – and it’s an investment in their future selves.” “We have created a system that allows our clients to earn a meaningful return on their cryptocurrency holdings without having to liquidate one of the best-performing asset classes of the decade,” the company claims.
The main problem for Gemini was that in order to offer investors high returns, the company had to make certain dangerous bets with its consumers’ cryptocurrency. It can be difficult to find a steady yield when prices start falling, but it’s not that difficult in a bull market. Genesis Global Capital, the lending arm of cryptocurrency investment firm Genesis Global Trading, owned by Silbert’s Digital Currency Group, was one of the ways Gemini generated these gains. Genesis received funds from Gemini users and lent them to institutional borrowers.
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