It's part of a Gemini settlement with the New York State Department of Financial Services
What’s cooler than giving away a million dollars? Giving away a billion dollars. The Winklevoss twins Cameron and Tyler, thrust into pop-culture fame after 2010's Facebook $META founding dramatization The Social Network, reached a settlement Wednesday (Feb. 28) with the New York State Department of Financial Services (NYFDS) to give back $1.1 billion to customers of their cryptocurrency exchange Gemini.
New York sued Gemini in October, alleging that the company had sloppily funneled user funds to Genesis Global Capital, a cryptocurrency lending firm that went belly-up last January, through a program called Gemini Earn. Gemini users were promised 8% “low-risk” returns if they lent their holdings to Genesis, and Genesis in turn lent the money elsewhere. It turns out that the returns were actually very high-risk: Genesis was a big client of the doomed cryptocurrency exchange FTX, which imploded massively in late 2022.
“Gemini’s failure to conduct sufficient and ongoing due diligence on GGC, as well as its failure to maintain adequate reserves throughout the life of Earn, caused significant reputational and monetary harm to Gemini itself and, to date, over 200,000 Earn customers, including almost 30,000 New Yorkers, remain unable to access their virtual currency,” NYFDS wrote in a statement announcing the settlement.
Famously, the Winklevoss twins sued their former Harvard classmate and Facebook founder Mark Zuckerberg for cutting them out of the windfall from the social network’s massive success. They got $20 million in Facebook stock as a settlement, which ended up being worth $200 million when Facebook, now Meta, went public.
The twins used some of that money to buy up 1% of all the bitcoin in the world, which at time was trading at about $10 apiece. Bitcoins now go for more than $60,000. Their second windfall made them super-rich, and as of Thursday (Feb. 29) morning, they were ranked no. 2107 (Cameron) and 2108 (Tyler) on Forbes’s most-wealthy list with net worths of $1.4 billion each. It is not clear how the settlement will affect those rankings.
Afterwards, they became cryptocurrency evangelists, nudging all sorts of Wall Street institutions to go in with them on democratizing investing in the category. They also proselytized in the halls of political power: During U.S. gubernatorial election cycles of 2018, the twins together gave more than $100,000 each to the campaigns of New York’s Andrew Cuomo and California’s Gavin Newsom.
They launched Gemini Trust Company in 2014; the Gemini exchange started trading in 2015. In 2019, they touted their trustworthiness to Quartz while discussing their marketing campaign “the revolution needs rules.”
Per Tyler: “One of the goals of the campaign is to make people aware that, despite what you may have read, despite what you might have experienced in the past, there are exchanges like Gemini that are trying to do it the right way and afford consumer protection and standards and safety that you would expect and require from any financial institution.”
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.
