The leading participants of the crypto market also constitute its greatest vulnerability. All reached sizes they could not handle, overextended, and failed to defend their companies against the difficulties that always arrive with the bear market.

While some of these institutions hold vast experience in the field, they still lapsed into unprofessional behaviors and mistakes that led to business viability issues.

Genesis, a DCG subsidy, is in deep trouble after the FTX collapse with a gap worth more than a billion dollars, and DCG (the parent company) stands in an even worse position.

Genesis owes $900 million to Gemini, money the exchange was lending out (via its Gemini Earn program) to traders (shorters) that coordinated trades (attacks) to crash prices of selected (if not all) cryptocurrencies.

More or less, a similar model was transpiring with every other custodian in space, be it Celsius, Gemini (“Rocketship!”), Crypto.com, Nexo, and similar schemes.

After the FTX collapse, everyone is wondering who is next.

Will that be Barry Silbert’s DCG or Gemini, the Winklevoss Tweens crypto exchange?

Winklevoss Tweens Going Broke?

Gemini profited vastly from the 2020–2021 bull run, but the structural problems of its custodian scheme didn’t take long to appear.

The Gemini Earn program (similar to Celsius and BlockFi) is lending out crypto to funds that attacked most (if not all) cryptocurrencies.

Dave Portnoy clearly never understood the crypto market or the purpose of cryptocurrency, but perhaps Cameron and Tyler Winklevoss did not either. They saw this as a business, a way to make more dollars, but actual support was close to null. All these custodians were never interested in adoption outside of the speculation phase, never promoted the usage of cryptocurrencies, and never cared for merchant adoption.

Portnoy is a fun guy to watch for sure, but seriously, during a bull run, everyone is a genius.

During the bear market, men walk separately from the boys.

2023 didn’t start with the best omens.

Cameron Winklevoss announced an open letter to Barry Silbert (DCG CEO), with Gemini exchange having paused withdrawals since November 30th.

Time is running out indeed, but essentially for Gemini.

DCG can drag this situation out for a long time since DCG is the partner holding the funds.

Barry Silbert was disinterested in Cameron’s speech:

A single mom who lent her son’s education money to you.A father who lent his son’s bar mitzvah money to you.A husband and wife who lent their life savings to you.A school teacher who lent his children’s college funds to you.A policeman, and so many more.

This part also raises another question:

What did Gemini do to protect all those customers?

Did they provide explicit warnings about the dangers of investing, and why would they accept the life savings of someone on their high-risk yield-bearing scheme?

That’s not just the fault of DCG, but the poor decisions and weak lending scheme Gemini operates.

Everyone with enough experience understands the dangers.

I have previously analyzed DCG and its subsidies Grayscale and Genesis. We were waiting for an escalation, and with the current market conditions, it seems impossible for DCG to cover a $2 billion gap.

Grayscale - DCG, A Looming Collapse Of Monumental Proportions

DCG Facing An Existential Threat As Genesis Collapse Is Imminent

medium.com

There is no time. The bullish sentiment of 2020 and 2021 shifted to tears and dismay.

DCG is in deep trouble for the first time while various other top market players are attempting to gather their pieces and strengthen the weak fundamentals of the fractional reserves models they operated for several years.

Closing Thoughts

Custodians selling dreams of decentralization on top of their centralized websites are now crashing one after another.

Maybe we could blame the internet for promoting Ponzi lords as influencers.

The internet has ceased supporting logic but suppresses work that warns against these dangers.

The rational crypto advocates will get beaten down to obscurity, and platforms will suppress content after armies of bots report those messing with their shady plans. We are pushed to promote the mainstream, even if the mainstream is Celsius, PompFi, and Terra Luna. And when we warn against the mainstream, we get suppressed and punished for pushing forward logical arguments.

There are several content creators and writers, even on Medium, supposedly advocating for decentralization and Bitcoin, but in fact, they promote only the shadiness and corruption in the field.

And this is how the system works for a while now. We warn, and we get banned and suppressed. Then people ask why nobody said anything. Well, here’s why:

I have six years of experience with cryptocurrency. I don’t claim I know everything, but my experience and research suggest not to trust any centralized service or exchange with my private keys.

When I see signs of immediate failure, I write about it out of respect for my followers.

You can follow all those who advised you to keep buying Terra Luna and UST right when they were both collapsing.

You can keep following the advice of PompFi Rocketship and the rest used car salesmen.

These guys have hundreds of thousands of followers on Twitter, so their voice matters more than a random like me.

There are crypto writers on Medium and crypto platforms, making a living by constantly telling you how they “earn” from all these custodian platforms like Gemini Earn, BlockFi, Nexo, and Celsius.

They are still up there, writing and publishing about their earnings, and bragging about how they get Medium followers and rewards, with no remorse for pushing people into custodians without ever mentioning the dangers.