Gemini Blocks “Earn” Crypto Program

Gemini is the latest in a series of companies experiencing problems with the processing of crypto and non-crypto withdrawals.

According to the company itself, it will not be able to process refunds to its account holders after the five-business-day service level agreement. 

Gemini crypto exchange incurs minor problems in the Earn program

In its statement, Gemini Global Capital says it is saddened that it will not be able to meet the SLA and allow its customers to make timely withdrawals.

1/6 We are aware that Genesis Global Capital, LLC (Genesis) — the lending partner of the Earn program — has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days. https://t.co/9e48pF3Ymn

— Gemini (@Gemini) November 16, 2022

To remedy the inconvenience, the company says its team along with that of Digital Currency Group are working hard to meet users’ needs in the shortest possible time. 

The other functions of the platform such as staking with regard to the Grow plan continue to function smoothly so the problems to operations only affect the above. 

Nansen, a blockchain intelligence platform, quantified that Gemini has experienced cash outflows (withdrawals) of $485 million in the last 24 hours. 

To be specific, $485 million is the difference between withdrawals ($563 million) and investments, which equals $78 million. 

In the last week, total withdrawals amounted to $682 million given by the difference between $1.55 billion in outflows and $866 billion in inflows placing emphasis on the fact that the bulk of withdrawals were concentrated on Wednesday.

“For the avoidance of doubt, Gemini has no exposure to FTT or Alameda tokens and no material exposure to FTX. Gemini is a full reserve exchange and custodian. This means that all client funds held on Gemini are held 1:1 and available for pick up at any time. Gemini holds clients’ fiat currency in accounts separate from our corporate, operational and reserve bank accounts specifically established for the benefit of Gemini clients. We do nothing with your fiat funds unless you are explicitly authorized and directed to do so.”

This is what it says on the platform’s website in relation to the recent FTX events that have brought so much turmoil to the industry. 

Gemini moves away from FTX’s modus operandi

With these specifics, Gemini intends to bring clarity and distance itself from the way FTX and Alameda Research work by emphasizing how they are used to manage their users’ assets, with transparency and accuracy. 

The company’s CEOs, tycoons Tyler and Cameron Winklevoss, in a joint statement explained what is the level of quality of service provided by Gemini. 

The platform, which was created precisely for the protection of account holders and to bring transparency to an industry that is now leaving its infancy, holds a number of international and not just US authorizations for its activities and custody. 

In this statement, the CEOs explain in detail the type of authorizations and what they entail instilling peace of mind in the consumer and giving an important signal of transparency in an industry already so harassed by some scammers:

“In addition to being a full-reserve platform, Gemini Trust Company, LLC is a qualified and fiduciary custodian under New York Banking Law and is licensed by the New York State Department of Financial Services (NYDFS). NYDFS imposes certain excess capital requirements and compliance standards for all assets held on Gemini. At all times, Gemini is required to hold capital in excess of client deposits and must report any material changes in that capital to its regulator. In connection with our licenses, Gemini is required to undergo annual reviews of our financial statements and is subject to bank reviews conducted by NYDFS. We are also SOC 1 and SOC 2 compliant.”

The company is determined to secure its accounts and operations as soon as possible, stating that the situation is only temporary and completely unrelated to the events that led to FTX Chapter 11. 

Gemini resumes full operations immediately

The operational halt was very short-lived precisely because of the solid foundation of the company, which, having solved the technical problems of the platform, with a tweet last night announced the full restoration of operations and therefore also of withdrawals. 

Gemini exchange fully back online; all customer funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time.

— Gemini (@Gemini) November 16, 2022

“Gemini is fully online again; all client funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time.” 

A very short-lived flash in the pan but it does illustrate how much pressure the cryptocurrency market has been under at the moment. 

The Gemini affair shows that among so many negative stories like FTX, there are also some positive ones and this can only be good for the market.