Cameron and Tyler Winklevoss went from being the co-originators of Facebook deceived by Mark Zuckerberg (as dramatized in the film “The Social Network”) to early crypto adopters who became “Bitcoin billionaires.” Now their firm has been charged by the United States Securities and Exchange Commission (SEC).
The SEC hit the twins’ cryptocurrency exchange Gemini with charges of securities violations on Thursday due to its Gemini Earn program, which promised a return to customers who deposited their crypto holdings. Genesis, its lending partner in the program and a subsidiary of Digital Currency Group (DCG), was also charged in tandem with Gemini.
The charges come after several weeks of increasingly public disputes between Gemini and DCG leadership following November’s collapse of crypto exchange FTX, which triggered a fresh wave of industry contagion as funds stored on FTX were either locked away or missing. Genesis is reportedly on the hook for more than $900 million worth of Gemini customer funds.
Winklevoss Demands DCG CEO Barry Silbert Step Down, Alleges Accounting Fraud
How did it come to this? Here’s a look at the Winklevoss twins’ rapid rise in the crypto industry and the recent moves that led to a public spat between Gemini and DCG, the SEC charges, and an apparently vast hole in Gemini’s finances.
The Winklevoss twins received some $65 million in cash and Facebook stock in the 2008 settlement over the creation of the social media giant. After establishing family office Winklevoss Capital in 2012, the brothers began amassing large amounts of Bitcoin. The twins owned as much as 1% of the circulating supply of the leading cryptocurrency as of November 2013, according to the Washington Post.
They went from buying up a stash of Bitcoin to leading an investment round in BitInstant, an early Bitcoin exchange whose founder Charlie Shrem was later imprisoned for money laundering related to the Silk Road marketplace. Also that year, the twins attempted to launch the first-ever Bitcoin ETF (or exchange-traded fund), which was rejected by the…