The Gemini Exchange in New York – headed by the Winklevoss Twins – has halted all withdrawals, sparking rumors that the company could be next in a long line of crypto firms to file bankruptcy.
Gemini Exchange Halts All Withdrawals
The move is a direct result of the collapse of FTX, which came crashing down in mid-November. Michael Barr, an official with the Federal Reserve, is calling upon Congress to regulate crypto once and for all due to the company’s failure. In a recent statement, he hinted at possible regulation in the future, saying:
Over the last several years, we have seen crypto asset activity grow rapidly and experience periods of significant stress. Some financial innovations offer opportunities, but as we have recently seen, many innovations also carry risks which can include liquidity runs, the rapid collapse of asset values, misuse of customer funds, fraud, theft, manipulation, and money laundering. These risks, if not well controlled, can harm retail investors and cut against the goals of a safe and fair financial system.
Gemini has close to $200 million tied up in the FTX exchange. In addition, it has reported that its outflows are significantly outdoing its inflows, and the company was forced to take quick action as a means of stabilizing itself. While withdrawals are halted, the firm issued a statement mentioning that products like Gemini staking will operate as they always have and are not affected.
This is a huge difference from just 12 months ago when the company garnered roughly $400 million in new funds to boost its expansion plans. The company is also working with Genesis to permit customers to redeem their money. Gemini mentioned:
We are disappointed that the Earn program SLA will not be met, but we are encouraged by Genesis and its parent company Digital Currency Group’s commitment to doing everything in their power to fulfill their obligations to customers under the Earn program. We will continue to work with them on behalf of all Earn customers. This is our highest priority. We greatly appreciate your patience.
A spokesperson for the firm is also stating that the company has no immediate plans to file bankruptcy and that it’s presently trying to work its present situation out. They said:
We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing.
Setting the Record Straight
The enterprise has also taken to Twitter to launch what’s called the Gemini Trust Center, which seeks to provide information and answer questions about what’s going on. Gemini commented:
I/We are pleased to announce the launch of the @Gemini Trust Center, a dashboard of metrics for the funds we hold in the Gemini platform and on your behalf, as well as other important data and information.
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