With 340,000 Gemini clients having $900 million locked in crypto lender Genesis' bankruptcy, the exchange is engaging in a third round of job cuts.
Hit by the bankruptcy of crypto lender Genesis, Cameron and Tyler Winklevoss' Gemini exchange is reportedly undergoing its third major round of layoffs.
The New York-based cryptocurrency exchange will lay off 10% of its staff, according to reports. That follows a 10% cut in June and a 7% cut in July.
In a message to staff seen by The Information, Gemini President Cameron Winklevoss blamed "persistent negative macroeconomic conditions and unprecedented fraud perpetuated by bad actors in our industry" for the latest layoffs.
The exchange was hit hard when crypto lender Genesis, with which it had partnered for its Gemini Earn accounts, halted withdrawals on Nov. 18 — freezing some $900 million owed to 340,000 Gemini customers, among others.
Genesis filed for bankruptcy on Jan. 20. It had been badly burned by its dealings with bankrupt hedge fund Three Arrows Capital, and when FTX went bust.
Adding insult to injury, the Securities and Exchange Commission sued both Gemini and Genesis last week — arguing that the Gemini Earn program, which offered up to 8% interest on deposits, was an unregistered securities offering.
The SEC and a group of state securities regulators forced another crypto lender, BlockFi, into a $100 million settlement over a similar lending program in February. BlockFi also declared bankruptcy in the wake of FTX's collapse in what prosecutors have called a $10 billion fraud.
It's been a brutal month for layoffs, with Genesis laying off 30% of its staff, crypto exchanges Huobi, Coinbase and Crypto.com each laying off 20% of their employees, and Blockchain.com and OSL announcing cuts of around 30%.
Fighting Words
Earlier this month, Winklevoss accused Barry Silbert, the CEO of Genesis parent company Digital Currency Group of "bad faith stall tactics" for refusing to negotiate about the Earn funds. Last week, he stepped that up to "fraud" and demanded that DCG's board remove Silbert or be sued. A group of Gemini Earn clients filed a separate lawsuit at the beginning of the month.
Silbert called those allegations "completely baseless and false."
And in bankruptcy court on Monday, Genesis lawyers said they have been in "around-the-clock" negotiations with the firm's creditors for the past two months — adding that they believe a deal can be reached without litigation, CoinDesk reported. That doesn't really align with what Winklevoss said in that pair of angry letters this month.
By entering bankruptcy, Winklevoss said Genesis had taken "a crucial step towards us being able to recover your assets" in a Jan. 19 Twitter thread. he added:
"Genesis will be subject to judicial oversight and be required to provide discovery into the machinations that brought us to this point."
