Gemini, a leading crypto exchange, explored merging with crypto broker Genesis. This strategic move aimed to forge a powerful alliance capable of competing against giants like Coinbase and FTX. The concept took root in October 2022 during a meeting between Gemini co-founder Cameron Winklevoss and Digital Currency Group (DCG) CEO Barry Silbert. They envisioned a merger that could transform the crypto landscape into a competitive arena.
“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
Cameron Winklevoss found the proposal of a tighter Gemini-Genesis-DCG partnership compelling. Such a merger would not only strengthen their market position but also attract significant investor interest. Plans included raising substantial funds, potentially up to $1 billion, and contemplating a public listing within two years. The strategy highlighted the potential for acquiring weaker competitors, further solidifying their market dominance.
Barry Silbert, who later stepped down from Grayscale, suggested enhancing the merger’s value by incorporating Grayscale’s assets into Gemini. This move aimed to establish Gemini as the world’s premier custody provider. Additionally, leveraging Coin Desk for generating customer leads was part of the strategic discussions.
However, the path to merger faced obstacles as Genesis filed for Chapter 11 bankruptcy in early 2023, a development following the collapse of FTX. This led Gemini to pursue legal avenues against Genesis over the control of significant GTBC shares collateral. The backdrop of legal battles, including a lawsuit from the SEC and a civil suit by New York Attorney General Letitia James, accusing the firms of defrauding investors, added complexity.