New York-based crypto exchange Gemini is reportedly looking to launch an international cryptocurrency derivatives exchange, batting for the global stage that’s seen dwindling reach from strong players like bankrupt FTX and legal issue-riddled Binance.
The crypto firm, founded by Cameron and Tyler Winklevoss, would have this platform specifically provide perpetual futures, a sort of crypto derivative that is prohibited in the United States for regular traders since it would not have an expiration date and can be traded with significant leverage, making it a high-risk product, The Information reported.
The announcement followed the bankruptcy of the FTX cryptocurrency exchange in November and last week’s Commodities Futures Trading Commission (CFTC) action against Binance for, among other things, violating US derivatives legislation. Both exchanges have pending cases with regulators.
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Gemini, however, is not without legal hurdles. The Securities and Exchange Commission (SEC) charged both Gemini and Genesis Global Capital in January for “the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program.”
The two companies were linked through Earn, a nearly two-year-old Gemini product that advertised returns of up to 8% on consumer deposits. With Earn, Gemini loaned client money to Genesis for placement across various crypto trading desks and borrowers.
Genesis reportedly has $175 million tied up in accounts at the now-bankrupt FTX. The firm then subsequently announced in November 2022 that it would be halting redemptions and withdrawals on its lending products, which affected Gemini and its Earn program.
The two companies then got into a public online rift; at the center of the feud is the $900 million Genesis “owes” to Gemini and its Earn users. In January, Genesis filed for bankruptcy.
Early in February, however, Cameron Winklevoss announced that Gemini reached an agreement in principle with Genesis to recover the investments made by Earn users.
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“In addition, Gemini will be contributing up to $100 million more for Earn users as part of the plan, further demonstrating Gemini’s continued commitment to helping Earn users achieve a full recovery,” Winklevoss said in a tweet.
Gemini appears to be temporarily setting that aside as it aims to establish its own international cryptocurrency derivatives market. Because of FTX’s exit and Binance’s regulatory concerns, a large market share in international futures trading may be up for grabs.
Earlier this month, it was revealed that fellow US-based exchange Coinbase was aiming to build an overseas platform to provide perpetual futures. Coinbase has its own regulatory difficulties, having received a Wells Notice from the SEC.
Gemini has been reaching out to trading businesses in recent months to serve as market makers for an offshore operation, according to people familiar with the subject.
Information for this briefing was found via Coindesk and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
