Gemini Lays off 10% Of Its Staff as Standoff With DCG Continues
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Gemini, the cryptocurrency exchange and brokerage platform founded by the Winklevoss Brothers of Facebook fame, has embarked on yet another downsizing operation as it continues to weather the market storm.
More Cuts for the Winklevii
Earlier today, news medium CNBC confirmed the layoffs at the New York-based exchange, explaining in a report that Gemini plans to shed another 10% of its workforce in the coming weeks. Citing a company spokesperson, CNBC explained that Gemini had blamed the latest round of job cuts on the effects of the extended market downturn and crypto winter.
Gemini’s spokesperson also blamed the current job cuts on “unprecedented fraud” perpetrated by “bad actors” in the industry, forcing the company to adjust its outlook for the future and re-evaluate its stand. The statement appears to be a subtle dig at the Digital Currency Group (DCG), whose subsidiary – lending platform Genesis Digital – currently owes Gemini about $900 million in capital from the latter’s Earn program.
The news appears to be the latest in a round of job cuts announced by Gemini. Back in July 2022, with the market downturn still fresh, the New York-based exchange had been one of the first to announce cuts, trimming 10% of its workforce at the time. Citing data from Pitchbook, today’s CNBC report claimed that Gemini had 1,000 employees as of November, thus speculating that about 100 employees would be set to leave the company in the coming weeks.
It is unfortunate that Gemini is choosing to cut staff once more, even though the crypto market has shown some modest signs of a recovery in the past few weeks. Most major coins are up by double digits year-to-date, with names like Solana (SOL) surging by over 100%.
No Hope in Sight for Lost Genesis Funds
Nevertheless, Gemini’s current woes appear to have been tied to its issue with the DCG. One of the most prestigious names in the market, DCG, has been struggling to maintain its operations in the face of the FTX saga. Its Gemini lending platform has been teetering on the brink of bankruptcy throughout last year as it was exposed to the Three Arrows Capital insolvency. However, both the DCG and the now-defunct FTX exchange came to Genesis’ rescue.
With FTX’s eventual implosion, Genesis was again left in the cold. The lending platform paused redemptions in November, with the FTX contagion eventually spreading and affecting it.
The problem, however, is that Genesis is the major partner for Gemini’s Earn program, which allows the exchange’s customers to get up to 8% annual percentage yield (APY) on certain deposits. By freezing withdrawals and pretty much going dark, Genesis left all of its clients stranded. Gemini, which had about $900 million with the lending platform, has since been looking to get its funds back.
For its part, Genesis has now filed for bankruptcy, blaming the market turmoil caused by the FTX implosion for its problems. The company explained at the time that it already had a restructuring plan along with possible solutions, including a sale, new capital raise, or an equitization transaction that would allow it to “emerge under new ownership.”
Whatever Genesis and the DCG plan to do, Gemini will surely be hoping to get its funds back – in part or totality.