Author|Protos Staff
Compiled| Wu Shuo Blockchain
TL;DR: Key takeaways from the Gemini 10-K report and internal circular lending
· Funds moving from left hand to right: The founder’s WCF lends crypto assets to Gemini, which then pledges them to a third party to obtain a USD loan, creating an internal circular lending loop.
· Low-price takeover: During the IPO, the founders' debt was converted into super-voting shares at a 20% discount, leaving retail investors to buy at high prices while the founders retained firm control of 94.7% of voting rights.
·Sword of Damocles: Although Deloitte has issued an unqualified audit report, WCF can withdraw up to 4,619 BTC at any time, putting the exchange’s liquidity under constant threat.
· Market cap collapse: Stock price has plummeted 88% since listing (down to $4.42), downgraded to "Sell" by multiple top investment banks, and faces a class-action lawsuit.
· Key conclusion: Gemini's favoritism toward founder interests and its reliance on affiliated-party funding have collapsed in the secondary market, triggering a severe governance and trust crisis.
Cameron and Tyler Winklevoss lent thousands of bitcoins ($BTC) and ether ($ETH) to their cryptocurrency exchange, Gemini, through their private investment company, Winklevoss Capital Fund (WCF). Gemini then pledged these crypto assets as collateral to Galaxy Digital and NYDIG to secure U.S. dollar loans.
In September 2025, the exchange went public at $28 per share and converted $695.6 million in WCF debt into Class B shares with super-voting rights at a 20% discount, giving the twin brothers direct control of 94.7% of Gemini’s voting power.
The Gemini 10-K filing submitted yesterday provides detailed disclosure of this entire operational structure. Social media users have referred to it as a "circular operation."
Attached post from the X platform:
This is entirely a circular Ponzi scheme:
Borrow BTC from an affiliate, WCF; pledge these BTC to a lender to obtain a USD loan (involving Galaxy, bond issuance, NYDIG).
Some of the loans were settled in the form of discounted shares at the IPO.
Moreover, there are additional operations (involving Ripple and RLUSD, convertible bonds, and more...).
Deloitte issued an unqualified audit report: no key audit matters (KAMs), and no mention of related parties, liquidity, or going concern issues...
How are these actions actually legal?
The lending cycle of Winklevoss Capital Fund
Here is the basic flow of funds. WCF, owned by the Winklevoss brothers, lent BTC and ETH to Gemini under an evergreen agreement.
Subsequently, Gemini pledged these borrowed crypto assets as collateral to third-party lending institutions. Galaxy Digital provided a $116.5 million loan at an interest rate of 11–12% with a collateralization ratio of 145–155%. NYDIG provided $75 million through repurchase agreements at an interest rate of 8.5%.
Gemini uses these U.S. dollars for daily operations and to meet regulatory capital requirements.
On September 15, 2025, upon completion of the IPO, the exchange used cash from the $456 million in net IPO proceeds to repay $116.5 million owed to Galaxy.
Gemini is currently listed on Nasdaq under the stock ticker GEMI.
The exchange also repaid $238.5 million under the Ripple warehouse credit facility, but as of year-end, $154 million in Ripple debt remained outstanding.
However, the twins' own debts were not repaid in cash.
Gemini converted $200 million in WCF convertible notes, $475 million in WCF term loans, and accrued interest into 31.1 million shares of Class B super-voting stock at a price of $22.40 per share.
This conversion price is 20% lower than the price paid by retail investors for the same class of A shares on the same day.
The difference between Class A and Class B shares lies solely in voting rights and ownership distribution. Otherwise, their par value, dividend rights, and liquidation preference are identical.
Class B shares can be converted into Class A shares on a one-to-one basis.
Retail investors bought at $28, while the Winklevoss brothers paid only $22.40
This discount is precisely the core issue through which this circular operation harms ordinary shareholders.
WCF lent crypto assets to Gemini. Gemini then pledged these borrowed assets to secure additional loans. Specifically, Galaxy and NYDIG lent USD to Gemini for its day-to-day operations.
Then, during the same IPO, Gemini allocated equity to WCF at a discounted price, while retail investors faced a 20% higher entry cost.
Further reading: Sources reveal that the Winklevoss brothers withdrew $280 million from Genesis before its collapse.
The SEC 10-K filing confirms that, as of December 31, 2025, Gemini still owes WCF 4,619 BTC, a balance valued at approximately $400 million.
In 2025, Gemini paid $24.2 million in borrowing fees to WCF.
In summary, according to Nasdaq’s corporate governance standards, Gemini simultaneously holds the three roles of debtor, custodian, and “controlled company.”
Despite being a publicly traded company, Gemini's co-founders still hold the majority of voting rights.
Additionally, according to data cited by crypto researcher Emmett Gallic from Arkham Intelligence, WCF has deposited approximately 8,757 BTC in Gemini Custody holding addresses.
Deloitte issued an unqualified audit opinion
Deloitte issued an unqualified audit report for Gemini. However, the reality is that WCF can demand repayment of this $4,619 BTC loan at any time.
This pair of twins was able to shake the foundations of the exchange they effectively controlled with nothing more than a written notice.
Gemini's current stock price on the secondary market has plunged 88% from its IPO offering price. “Gemini Space Station,” its legal entity name evoking the imagery of a rocket launch, clearly no longer lives up to its name, as its opening price on IPO day was $37.01 per share.
Each share is now only $4.42.
Gemini set its IPO offering price at $28 on September 11, 2025. The next day, it opened at $37.01, reached a high of $45.89, and then entered a prolonged decline. After hitting a 52-week low of $3.91 on Monday, the stock closed at $4.42 on March 31, 2026, down 88% from its opening price.
The company's market capitalization has plummeted from over $3.8 billion to approximately $520 million. Citigroup, Cantor, Truist, and Evercore have all downgraded the stock to a "sell" rating.
A class-action lawsuit has been filed alleging that the company misled investors regarding its strategic planning.