Make no mistake, Gemini promises that “all customer funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time.” And, apparently, they’re just temporally halting withdrawals in one of its services. However, in the fear-ridden climate we’re living in, is it worth the risk to keep funds in the exchange? Especially considering that their website was down for a few hours today. Which might mean nothing, but…
Let’s start with the company’s official statements and go from there.
Gemini EARN Is Temporarily Halted
According to the Winklevoss twins’ PR team, the denial of service has to do with their partner Genesis Global Capital’s decisions.
“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. We are working with the Genesis team to help customers redeem their funds from the Earn program as quickly as possible.”
Ok, that doesn’t sound so bad. Earlier today, Bitcoinist quoted Genesis explaining their decision and how the situation looks from their end. Of course, it all comes down to the disaster Sam Bankman-Fried brought forward.
“FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity. Our #1 priority is to serve our clients and preserve their assets. Therefore, in consultation with our professional financial advisors and counsel, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business.”
Back to Gemini’s statement, the company assures that things will go back to normal soon enough. “We are encouraged by Genesis’ and its parent company Digital Currency Group’s commitment to doing everything in their power to fulfill their obligations to customers under the Earn program,” they wrote avoiding making any commitments. “This does not impact any other Gemini products and services. Gemini Staking, which is part of our Grow offering and separate from the Earn product, continues to operate as usual.”
Ok, so far, so good… however…
GUSD price chart for 11/16/2022 on Bitstamp | Source: GUSD/USD on TradingView.com
Is Gemini Under Water, Though?
As it’s usual lately, today was a pretty eventful day in crypto. Earlier, analyst Dylan LeClaire informed the world that Gemini’s services were “down across the board” and advised everyone to “Withdraw. No need to take any unnecessary risks.” He had images to back up his claims:
Gemini services are down across the board pic.twitter.com/yO0yLdJlgl
— Dylan LeClair (@DylanLeClair_) November 16, 2022
The company wasted no time and informed the world that “We experienced an Amazon Web Services EBS outage with one of our primary databases. We have restored the database and are bringing the exchange back up.” It all sounded suspicious, especially considering how FTX’s website went down before they started admitting it all. However, an hour later they tweeted, “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 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
Is everything under control, then? Judging by the replies to that tweet, some Gemini clients are still having trouble withdrawing their funds. And approximately 30% of the people still believe that Gemini is secretly insolvent. Considering everything that has happened to centrally controlled exchanges this year, can we really blame them?