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Gemini’s 10-K reveals loan loop between exchange and founders

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Gemini’s 10-K reveals loan loop between exchange and founders

Cameron and Tyler Winklevoss lent their own crypto exchange, Gemini, thousands of bitcoin (BTC) and ether (ETH) through Winklevoss Capital Fund (WCF), their private investment company. Gemini then pledged that crypto as collateral with Galaxy Digital and NYDIG to raise dollar loans. 

When the exchange went public in September 2025 at $28 per share, it converted $695.6 million of WCF debt into super-voting Class B stock at a 20% discount, giving the twins 94.7% of Gemini’s voting power.

Gemini’s 10-K, filed yesterday, spelled out the entire structure. Social media users have called it a circular scheme.

Here’s the basic tale of how the money flowed. The Winklevii’s WCF lent BTC and ETH to Gemini through open-term agreements, i.e. with no fixed maturity. 

Gemini then posted that borrowed crypto as collateral with third-party lenders. Galaxy Digital extended $116.5 million in loans at 11-12% interest rates, collateralized at 145-155%. NYDIG provided $75 million through a repurchase agreement at 8.5%.

Gemini used the dollars for operations and regulatory capital requirements. 

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When the IPO closed on September 15, 2025, the exchange repaid Galaxy’s $116.5 million from $456 million in net proceeds from the IPO.

Gemini now trades on the Nasdaq under symbol GEMI.

The exchange also repaid $238.5 million under a warehouse credit facility with Ripple, though $154 million remained outstanding to Ripple at year end.

The twins’ own debt didn’t get cash repayment, however.

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Gemini converted $200 million in WCF convertible notes and $475 million in WCF term loans, plus accrued interest, into 31.1 million supervoting Class B shares at $22.40 apiece.

That conversion price was 20% below what retail investors paid for otherwise equivalent Class A shares on the same day.

Class A and B stock differ only in their voting power and ownership distribution. Otherwise, they have the same par value, rights to dividends, and liquidation preference.

Class B shares are convertible into Class A on a one‑for‑one basis.

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Retail paid $28 with the Winklevii at $22.40

The discount is where the circularity inflicted pain on regular shareholders. 

WCF lent Gemini crypto. Gemini then pledged the crypto that it had borrowed to get even more loans. Specifically, Galaxy and NYDIG lent Gemini dollars which it used to operate. 

Gemini then handed WCF equity at a discount funded by the same IPO that brought retail in 20% higher.

Read more: Sources say Winklevoss twins withdrew $280M from Genesis before it collapsed

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The SEC Form 10-K confirms that Gemini still owed WCF 4,619 BTC as of December 31, 2025. That balance was worth roughly $400 million.

Gemini paid WCF $24.2 million in loan fees in 2025.

In summary, Gemini is simultaneously debtor, custodian, and a “controlled company” according to Nasdaq corporate governance standards.

Despite being publicly traded, Gemini’s co-founders still control a majority of its voting power.

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Moreover, WCF holds roughly 8,757 BTC in Gemini Custody addresses, according to Arkham Intelligence data cited by crypto researcher Emmett Gallic. 

Deloitte signed off clean

Deloitte has issued clean audit reports on Gemini. This is despite the reality that WCF could demand repayment of its 4,619 BTC loan at any time.

The twins could destabilize the exchange they control with a single written notice.

Gemini’s public stock now trades 88% below its IPO price. “Gemini Space Station,” its legal and rocket-based name that it certainly has not lived up to, opened at $37.01 per share on its IPO day.

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It’s worth $4.42 today.

Gemini priced its IPO at $28 on September 11, 2025. It opened at $37.01 the next day and hit $45.89 before beginning a relentless decline. The stock closed at $4.42 on March 31, 2026, down 88% from the opening price, after touching a 52-week low of $3.91 this Monday

The company’s market cap has collapsed from over $3.8 billion to roughly $520 million. Citigroup, Cantor, Truist, and Evercore downgraded the stock to a Sell rating.

A class action lawsuit alleges the company misled investors about its strategy.

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Crypto World

The Next Crypto Bull Run Won’t Be About Coins or Viral Hype

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Crypto bull cycles over the past 5 years have been mostly about token speculation and, more recently, institutional adoption. But the next cycle will be dominated by real-world applications, according to Clem Chambers – founder of ADVFN, Europe’s leading stocks and markets website

Speaking at BeInCrypto’s Markets Intelligence Council, Chambers argued that the industry is moving past its trading-driven cycle.

“That era has probably ended and certainly is coming to an end. And then that will be replaced by use cases,” he said, pointing to a structural change in how value is created in crypto.

The Trade Is Crowded, The Utility Isn’t

His comments come as the current cycle shows clear divergence between price action and underlying activity. Bitcoin and Ethereum continue to attract institutional flows, especially in a post-ETF environment. 

However, capital is concentrating at the top, while mid-tier tokens struggle to hold attention or liquidity.

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At the same time, a different layer of the market is gaining traction. Tokenized real-world assets, stablecoin-based payment rails, and blockchain infrastructure tied to AI and data are seeing steady growth. 

These sectors generate usage, fees, and in some cases, real revenue — something most speculative tokens failed to deliver in previous cycles.

Forget Tokens, Think Products

Chambers framed this shift bluntly. 

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“Forget Fi and look for apps, not Fi, apps, applications of tokens and blockchains,” he said. 

Earlier cycles focused on financial primitives — DeFi protocols, yield farming, and token trading. The emerging trend centers on applications that users interact with directly, often without focusing on the underlying token.

This aligns with broader market signals in 2026. Tokenized funds from firms like BlackRock and growing stablecoin usage in payments show how blockchain is embedding into existing financial systems. 

Meanwhile, infrastructure sectors such as decentralized physical networks and AI-linked protocols are attracting developer activity and venture funding.

However, this transition is uneven. Speculative trading still drives short-term price moves, and retail participation remains largely momentum-based. 

Many application-layer projects also struggle with user retention and monetization.

Even so, the direction is becoming clearer. If previous cycles were driven by narratives around tokens, the next phase may depend on whether blockchain-based applications can deliver consistent utility.

Chambers’ argument reflects a broader reality: the market is starting to reward usage over hype. 

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Whether that shift fully defines the next cycle will depend on how quickly these applications can scale beyond crypto-native users.

The post The Next Crypto Bull Run Won’t Be About Coins or Viral Hype appeared first on BeInCrypto.

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Drift Protocol Warns of Potential Cybersecurity Exploit

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Cybercrime, Cybersecurity, Hacks, Decentralized Exchange

Drift Protocol, a decentralized cryptocurrency exchange (DEX), detected “unusual” trading activity on the platform on Wednesday, warning users not to deposit funds until the issue has been resolved.

The Drift team did not disclose the specific cause of the ongoing incident or the damage in its initial announcement and is currently investigating the issue. 

In a subsequent update, the Drift team announced that deposits and withdrawals on the platform have been suspended. 

Cybercrime, Cybersecurity, Hacks, Decentralized Exchange
Source: Drift Protocol

Blockchain cybersecurity threat researcher Vladimir S said the exploit was likely due to a crypto wallet private key leak, and the total funds lost in the incident could be as high as $200 million. 

“Admin signer was compromised, or whoever controls it intentionally executed these changes,” he said

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The stolen assets include wrapped versions of Bitcoin (BTC), Jito (JTO), the Fartcoin (FRT) memecoin, other altcoins, and various dollar, euro, and Japanese yen stablecoins, which have since been transferred to multiple wallets, according to Vladimir S.

Cybercrime, Cybersecurity, Hacks, Decentralized Exchange
Source: Vladimir S

The exploiter started converting the stolen assets to the USDC (USDC) stablecoin, bridging the funds to the Ethereum network and purchasing Ether (ETH), according to Solana treasury company DeFi Development Corp.

Cointelegraph reached out to Drift Protocol but did not receive an immediate response by the time of publication. 

Cybersecurity exploits and hacks were responsible for $49 million in crypto losses during February, a sharp decrease from January, but a reflection of the ongoing security threats users and platforms face.

Related: Resolv temporarily halts protocol to ‘contain the impact’ of 80M USR exploit

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Drift token impacted by the exploit

The price of the Drift (DRIFT) token briefly reached $0.68 on Wednesday, but fell by about 18% following news of the exploit, according to data from CoinMarketCap.

Cybercrime, Cybersecurity, Hacks, Decentralized Exchange
Drift token falls after news of the exploit. Source: CoinMarketCap

About 83% of the native crypto tokens of hacked platforms never recover to pre-hack prices, according to blockchain security company Immunefi. 

“The stolen funds are only the first layer of damage,” Immunefi CEO Mitchell Amador told Cointelegraph in March.

“What follows is often more destructive: sustained token price suppression, reduced treasury capacity, leadership disruption, lost development time, and erosion of user trust,” he added. 

Magazine: WazirX hackers prepped 8 days before attack, swindlers fake fiat for USDT: Asia Express

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