Illustration by Luis G. Rendon/The Daily Beast
Marketing materials depicted a tantalizing opportunity: Users of Gemini—the cryptocurrency exchange founded by identical twins Cameron and Tyler Winklevoss—could hand over their digital assets to a product called Earn. The assets would then be loaned out, generating returns as high as 7.4 percent per year. Feeling nervous? Gemini promised investors they could redeem their crypto “at any time…plus the interest you’ve earned!” To some, this gave the impression that their money was safe.
That apparently wasn’t the case. On Nov. 16, the company announced that amid fallout from the crypto exchange FTX, its lending partner, Genesis, had “paused withdrawals,” thereby locking up customer assets. The Financial Times subsequently reported that Genesis owed Gemini’s clients a staggering $900 million.
Multiple former Gemini employees told The Daily Beast that the company downplayed Earn’s riskiness from the outset.