Gemini Freezes Earn Withdrawals | Hacker News Reader

Gemini Freezes Earn Withdrawals

gemini.com

62 pointspgm870519 comments

This is crazy. Gemini does a lot of work to be "legit". If they are willing to cover the money if their backing provider fails, why not just pay it promptly and collect from the backend later?

Freezing withdrawals means they are screaming "we are insolvent" even if they aren't.

>If they are willing to cover the money if their backing provider fails, why not just pay it promptly and collect from the backend later?

What makes you think they're willing to compensate their customers? Sure, it might be great for their reputation to do so, but they offered no such guarantees[1] and such a bailout will be tremendously expensive.

[1] https://www.gemini.com/legal/gemini-earn-program-terms-and-a...

Let's be clear: this says they're _pausing_ withdrawals. Could be forever or it could be like FDR's Bank Holiday to allow a calm amount of transactions to occur over time.

Welp, once again I am proud of myself for being a gambler with the winds of luck at my back, and this is another example: I took out all my GUSD -> USD including a couple thousand $ profit from the Earn program a few weeks ago. Not because I was ahead of the game but because I used that $ for my house remodel. Thanks Gemini!

These companies operate out of pacific islands. All they have is trust. Once trust is broken it is gone. There is no unpause

Gemini made it very clear that the Earn program had exposure to risk and described that risk step-by-step. Low risk, low reward.

Gemini the exchange is supposedly regulated similar to an American bank and as far as I know not directly affected by or responsible for the pausing of Earn withdrawals. My hope is that it's a matter of low liquidity at a moment rather than some1 ran out the back door w/ the loot.

I thought about throwing some money in there when Gemini was paying around 8% interest. I was a bit skeptical that it was sustainable even though people said the Winklevoss's and Gemeni were about as legit as it gets in that space. Glad I didn't, I feel bad for people who won't be able to get their money out in a reasonable way

The Winklevosses' claim to fame is that they were even less ethical than Zuckerberg when Facebook was first starting out.

Thought this was about the http alternative for a second.

You're not the only one. Quite a shock to find something so opposed to what I expected. Gemini the simple web-like protocol vs. whatever this buttcoin dumpster fire is. All I wanted was to see the discussion around Project Gemini and discover new communities.

Gemini is FDIC insured, but does that include if the value of their stablecoin (GUSD) plummets?

FDIC insures you against the failure of the bank that holds the funds for you.

It does not protect you from Gemini losing or stealing the funds.

> This FDIC “pass-through” insurance may be available in the event that the Bank holding such U.S. dollar cash deposits becomes subject to resolution or similar proceedings by the FDIC.

https://support.gemini.com/hc/en-us/articles/205823016-Are-m...

Edit: Just curious, but how did you come to believe Gemini was FDIC insured?

I was told by a friend who has ~$30k of ether sitting in there either as ether or GUSD, I don't know which, we haven't talked about it since the crash for obvious reasons.

It is on their website, but you have enlightened me: it won't protect them from grubby Winklevoss shenanigans, only the failure of the bank, and apparently only for USD assets. From the website:

U.S. DOLLARS

U.S. dollars in your Gemini Account may be held at Silvergate Bank, State Street Bank and Trust Company, JPMorgan Chase Bank, N.A. or Signature Bank and thus may be eligible for FDIC “pass-through” insurance, subject to applicable limitations. Please see the FDIC Insurance section of our User Agreement for more information.

EDIT: Oh, my copy-paste is from the very link you sent. Doh.

"Gemini" is not FDIC insured. GUSD is does not, and Gemini was sanctioned for lying about it.

https://www.coindesk.com/policy/2022/08/19/fdic-orders-ftx-u...

Their "Earn" product most certainly isn't FDIC insured:

>YOUR AVAILABLE DIGITAL ASSETS WILL LEAVE OUR CUSTODY, AND YOU ACCEPT THE RISK OF LOSS ASSOCIATED WITH LOAN TRANSACTIONS, UP TO, AND INCLUDING, TOTAL LOSS OF YOUR AVAILABLE DIGITAL ASSETS.

https://www.gemini.com/legal/gemini-earn-program-terms-and-a...

The bank under Gemini is FDIC insured: if the bank fails, Gemini will have $100k back...

The true value of the FDIC play is to scam fools.

>The true value of the FDIC play is to scam fools.

Not really. It's true that it doesn't protect you in the event that the event gets hacked or whatever, however it does protect you from the exchange deciding to store its funds in some shady offshore bank (I think Tether does this) that later suffers a liquidity crisis.

It doesn't really: the problem is the exchanges dont store money in banks in the first place, they give it immediately to deltec to get USDT, then monkey around with it. Then ofc some of it is FDIC insured for a small amount, but they advertise it shadily to make you believe you're insured up to that amount.

Even FTX got fined for their abusive use of FDIC marketing...

Isn't it $250k?

Important detail, indeed.

Reply on news.ycombinator.com