Crypto exchange Gemini planned public debute via Genesis merger, court documents show

Winklevoss’ crypto exchange Gemini was exploring an option to merge with crypto broker Genesis to compete with Coinbase and FTX.

In October 2022, just a month before FTX filed for bankruptcy, Gemini co-founder Cameron Winklevoss discussed at a lunch with Digital Currency Group (DCG) CEO Barry Silbert an idea of a closer partnership between the two companies that would make the joint entity a “juggernaut” to compete with Coinbase and FTX.

According to recently revealed court filings, Cameron Winklevoss was “intrigued about the idea of a closer partnership between Genesis/Gemini/DCG, including a potential merger of the companies,” Silbert wrote in an email to other DCG executives.

Silbert, according to the email, also warned Winklevoss at lunch about a possible bankruptcy of Genesis, which in turn, would put the exchange’s deposits at “significant risk.” Despite the warning, Cameron Winklevoss decided to continue to work with Genesis “to mitigate that risk.”

“I put him on clear notice that the path we’re on right now could lead to a Genesis bankruptcy, which would put Gemini’s deposits (and therefore, Gemini’s business) at significant risk. He took that part surprisingly well and appreciates we need to work together to mitigate that risk.”

Barry Silbert

According to disclosed correspondence, the combined company “would be super exciting to investors,” as it could go raise between $500 million up to $1 billion and take the company public “in 24 months.” Moreover, the joined entity would also make an opportunity to “acquire and roll up weak competitors,” Silbert noted.

Barry Silbert, who resigned as Grayscale chairman in late December 2023, allegedly was also mulling the idea of transferring Grayscale’s assets to Gemini, thereby making the exchange the “largest custody provider in the world.” Silbert also emphasized the combined entity “could use Coin Desk for customer lead gen.”

The trajectory of Genesis took a downturn when it filed for Chapter 11 bankruptcy protection in early 2023, following FTX’s collapse. Subsequently, Gemini initiated legal action against Genesis in late October 2023, seeking ownership of approximately 60 million GTBC shares that Genesis had offered as collateral.

Both Gemini and Genesis faced legal challenges, including a lawsuit from the U.S. Securities and Exchange Commission (SEC) for unlawful securities sales through the Earn program. Additionally, New York Attorney General Letitia James filed a civil lawsuit totaling $1 billion against Gemini, Genesis, and DCG, alleging their involvement in defrauding American investors. Later, James escalated the demand for restitution to $3 billion.