Gemini Shuts Down Accounts Over Gemini Dollar (GUSD) Stablecoin Redemptions
This is a very controversial time for the Gemini exchange, which was created by the two U. S. investors known as the Winklevoss brothers, Cameron and Tyler. According to Coindesk, two over the counter (OTC) desks, the company has decided to shut down their accounts recently without offering any kind of explanation at all.
According to the two OTC desks, which decided to remain anonymous in order to protect their reputation against any attacks, Gemini has decided to close them down as they attempted to redeem Gemini USD (GUSD) tokens for fiat cash.
GUSD is the first stablecoin created by the exchange and it can, in theory, be traded by fiat currency at any time that the holder wishes. However, these claims state that the company did not let the investors exchange the money.
One of the OTC trades, which is based in Latin America, tried to redeem millions of dollars worth of GUSD tokens, but the account was closed before that was allowed to happen. Gemini sent an email to the person who managed the account and said that it had to shut it down but unable to “elaborate on the specificities for this decision”, which enraged the OTC desk.
Gemini was directly contacted by Coindesk, but the exchange decided to remain silent until the time of our report.
Gemini May Have Made A Bad Move Last Year
There is plenty of speculation for the reasons behind Gemini’s treatment of the investors, but one of the popular theories have to do with the fact that Gemini took some measures that were originally made to boost the impact of the launch of GUSD but may have created unintended consequences.
For instance, the exchange offered 1% discounts last year when it was selling the GUSD tokens for major investors. However, in order to receive this discount, which was very big when you consider that the price of a stablecoin does not change at all, the companies had to agree to not trade the assets immediately.
At this time, the deal was offered to the unnamed Latin American OTC desk, but they wanted to buy the tokens to redeem them into fiat, so they did not accept the deal. After that, they found other ways to acquire GUSD tokens for their desk. After that, the trader said that he was warned by Gemini when he got the tokens that redeeming them could hurt the stablecoin.
The other OTC desk, which is based in the United States, was able to redeem its tokens but it had its account shut down soon after, according to Coindesk. The representants from the unnamed U. S.-based OTC desk affirm that Gemini has used the strategy of selling the tokens cheaper in order to maximize its market cap but that the exchange is against people redeeming the tokens now.
In both cases, Gemini is being accused of shutting down the accounts without offering any explanation, which prompted the two OTC desks to believe that the reason was the whole issue with redeeming the tokens because most of them were sold with discounts.
According to reports from the industry, even some big players are afraid to redeem their tokens and lose their accounts. Gemini, if this story is to be believed, sold them tokens that they are now unable to redeem without being afraid, which is a very serious accusation.
Gemini Actually Wants The Wall Street Players
It is a well-known fact among the industry that Gemini caters to institutional investors from Wall Street, so it is not a complete surprise that the exchange is not caring a lot about OTC desks. Gemini often describes itself as a “regulated exchange” and a New York trust company. Because of this, it does not allow many potential customers on the platform.
An official statement from the company has already affirmed that the fact that many people do not pass on the company’s test of admission is “a feature, not a bug” and that it is necessary for the company to build trust.
One of the main problems of the whole story is that these OTC desks may be Gemini clients, but they are also competitors in the industry. Some sources told Coinbase that more than $133 million USD worth of GUSD has been redeemed so far and that the business is moving as usual.
The same source affirmed that these OTC desks may be lobbying against Coindesk as well, mostly for monetary reasons. However, the reports against Gemini continue and a third OTC desk has also complained that it had its account shut down, this time because it offered a “competing product”.