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Billionaire Winklevoss Twins’ $900M Disaster Is No Shock

 2 years ago
source link: https://finance.yahoo.com/news/winklevoss-crypto-firm-employees-saw-020240051.html
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Billionaire Winklevoss Twins’ $900M Disaster Is No Shock

Noah Kirsch
Thu, December 8, 2022, 11:02 AM·6 min read
Illustration by Luis G. Rendon/The Daily Beast
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.

“Gemini definitely sold it as like, ‘It’s hassle-free. It’s easy. Get your crypto back right away, no delays,” said Nick Fuhrmann, who worked as a senior data engineer at Gemini until November 2020, while the product was being developed. “It kind of came across as less of a risk, at least to me.”

Even Fuhrmann, whose work in the industry presumably made him a more sophisticated crypto investor, said he underweighted the risks of Earn when he deposited his assets into the program. Now, he too is waiting to see what will become of his money.

A second former employee argued that the entire point of Earn was to find a new revenue stream for the company, even if it put customers at risk.

“The business makes money on fees, so how do you get more fees? You invent a new product,” he said. “I think that was the overall sentiment inside the company.”

The employee said he didn’t work directly on developing Earn. When the product finally launched in February 2021, he said, he and other employees saw the terms and conditions for the first time. “[We] were like, “Holy shit, are you fucking kidding me?’” he said.


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