FTX’s collapse in November 2022 brought down Genesis Global, Gemini’s key partner for Gemini Earn, its yield-generating product that lets users deposit their crypto for a passive income paid out daily.
$900 million of customer funds were frozen as Gemini halted redemptions. While Gemini worked to crawl its funds back from a now defunct Genesis Global, many promises were made. However till today, Gemini Earn customers are still not able to access their crypto.
To add fuel to the fire, JP Morgan publicly broke off all ties with Gemini. Although they continue to work with several other banks, the US bank crisis probably got venture capitalists worried about Gemini’s financial stability.
It’s little wonder why Gemini has failed to raise funds repeatedly.
Thus, the Winklevoss twins (founders of the Gemini exchange) have no choice but to extend a personal loan of $100 million to the company. The funds along with another $100 million put aside by Gemini back in Jan 2023, would likely be used to compensate users of the Gemini Earn program.
Is Gemini going down?
This question has been up in the air ever since Gemini suspended redemptions of its Earn program. After all, Genesis Global made the exact same move just before going bankrupt.
Assuming that they have about $200 million earmarked for customer compensation, there’s still a whooping $700 million gap to fill.
With its reputation seemingly in the trenches and the lack of action from the Winklevoss twins till today, confidence in the exchange has fallen to new lows.
This is evident even in its user transactions – Coindesk reported that Bitcoin inflows to Gemini is at a six-year low as of Jan 2023. And this trend isn’t due to a drop in crypto interest – Kraken and Coinbase saw Bitcoin inflows grow by 30-40% in Jan 2023.
As users, we do not have direct insights to Gemini’s books and will not be able to decipher their financial health.
So, what should you do?
As the saying goes – “not your keys, not your crypto.”
Since the FTX blow up, we have learnt that assets kept on exchanges do not really belong to us because we can lose access to our assets at any time.
It might be a prudent move to shift your liquid assets off exchanges onto your own wallets.
Learn how to keep your crypto assets safe while growing your wealth with Aik Keong (AK), our crypto trainer and mentor in our live Crypto 101 masterclass.
