Winklevosses Lean on MAGA Clout as Gemini’s Losses Mount Ahead of IPO

(Bloomberg) — From all appearances, this should be a crowning moment for Cameron and Tyler Winklevoss.

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Last year, the telegenic billionaires and their crypto company, Gemini, were on the political outs, facing government probes for a lending product that collapsed. In a remarkable turnaround, the twins have become central players in the nexus of power between the crypto industry and President Donald Trump’s MAGA complex. Now the brothers are taking advantage of the moment to raise as much as $433 million for Gemini in an initial public offering expected later this week.

The IPO, though, is laying bare an inconvenient situation: that despite all the trappings of wealth and success, the 44-year-old brothers have faced ongoing difficulty in catching up with rivals and turning their decade-old company into a profitable business.

According to its prospectus, the IPO will value Gemini Space Station Inc. at roughly $3.1 billion, less than half of what the business was estimated to be worth in a fundraising round in 2021. The drop in Gemini’s value has come at a time when its biggest publicly traded US competitor, Coinbase Global Inc., has touched fresh records.

The money-losing exchange hosts just a small fraction of the trading in the US — Coinbase, for example, attracted about 25 times as much volume as Gemini in recent days, according to CoinGecko data. And Gemini has depended on loans from the brothers themselves, who own around 80% of the company, according to a person familiar with the business, who requested anonymity because their economic stake is not disclosed in the IPO filings.

A Gemini spokesperson didn’t respond to multiple requests for comment about the IPO or their political engagement and ownership stake.

The contrast between the public image and the corporate performance tells a broader story about the crypto world in the Trump era, when wealth and access have little to do with business fundamentals. Going public will test how long the two can remain disconnected, and whether the brothers can narrow the gap.

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“Obviously they are close” to the Trumps, said Markus Thielen, chief executive officer of 10x Research. “But I don’t see how that necessarily helps them. It’s primarily an exchange. For the exchange, you need to drive more volume.”

For now, Tyler, who is chief executive officer of the company, and Cameron, who is president, are continuing to ramp up their bet on the political transformation of crypto. In a relatively short period of time, they have gone from regular Democratic donors to some of Trump’s staunchest supporters.

In late August, the twins donated $21 million in Bitcoin to a new political action committee, the Digital Freedom Fund, that will support Republicans and “champions of President Trump’s crypto agenda,” Tyler Winklevoss wrote on social media. Their goal, he said, is to help Trump’s efforts to “usher in America’s Golden Age.”

The crypto-friendly policies passed by Trump have already helped boost the brothers’ huge crypto portfolio, making the twins worth around $14 billion, according to the Bloomberg Billionaires Index, up about 60% since election day.

The regulatory climate has also created a receptive atmosphere for crypto IPOs. Despite the business metrics, the Gemini offering is already oversubscribed and on Tuesday the company raised the price range it expects to get when it sells shares to the public on Thursday afternoon, Bloomberg News reported. Gemini said in a filing this week that Nasdaq, where the company will be listed under the ticker GEMI, is making a $50 million private placement investment in the company.  

In an updated registration filing released Wednesday, Gemini disclosed that the twins are expected to receive about 35 million Class B shares in exchange for roughly $700 million in outstanding convertible loans still owed to them by Gemini. At the top of the IPO range, those shares would be worth more than $900 million.

Crypto Converts

The Winklevoss twins were among the earliest public figures to come out as Bitcoin investors, just a few years after rowing together in the Beijing Olympics.

They first learned about the digital currency in 2012, during a chance encounter on a beach in Ibiza. At the time, each Bitcoin was worth less than $10, and they were flush with cash after a legal battle with Mark Zuckerberg over their role in the creation of Facebook. They set out to purchase 1% of all the outstanding digital tokens, worth some $11 million when they went public with it in 2013.

With their private stash — now worth billions — they founded Gemini the next year. In 2021, they raised $400 million in a round that valued the business at $7.1 billion.

During those earlier years, the brothers talked up the importance of working with regulators in a publicity campaign that carried the tagline, “Revolution Needs Rules.” Gemini was one of the first crypto businesses to get a New York state charter.

Then came the downfall of FTX and the ensuing market crash in 2022. Gemini and its lending partner, Genesis, offered a product akin to a high-yield savings account that gave customers a return on their cryptocurrency deposits. When Genesis went bankrupt, about $1 billion worth of customer tokens were frozen. Lawsuits and regulatory probes ensued.

The users of the program, called Gemini Earn, were eventually made whole. Gemini settled with the New York Attorney General for $50 million, without admitting or denying any wrongdoing. But the brothers adopted a much more critical stance toward regulators and the Biden administration.

“The last administration was threatening their livelihood, threatening their business,” said John Deaton, a Republican whom the twins supported during a failed 2024 run against Senator Elizabeth Warren in Massachusetts.

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“Male Models”

A turning point for the twins came in June of 2024, when they attended a Trump fundraiser that David Sacks hosted for about 100 people in San Francisco. Sacks, now the president’s AI and crypto czar, later remembered that Trump — who is known to focus on appearances — took to the twins right away.

“He picked you guys out,” Sacks told the brothers during a fireside chat at a conference earlier this year.

“I know you guys really created Facebook,” Sacks recalled the president telling them. “I know you didn’t win that court case, but it’s okay. Because you guys got dealt a lot of cards. You’re very rich. Very handsome.”

The brothers quickly turned into significant GOP donors and gave so much to Trump’s re-election campaign — $1 million each — that they were partially refunded, to avoid running afoul of campaign contribution rules.

During his now-famous pro-crypto speech in July, Trump gave the twins a shoutout, referring to them as “male models with a big beautiful brain.”

The twins, like many other crypto insiders, benefited as soon as Trump took office. The Securities and Exchange Commission informed Gemini in February that it was wrapping up an investigation of the company (though it’s still working to resolve an SEC lawsuit). Less than a month later, the brothers grinned at a White House crypto summit alongside the president, who nodded to all of the “high-IQ individuals” like them seated around him.

Whereas some crypto insiders have tried to maintain relationships across the aisle, the brothers have gone all in on Team Trump. They bought stakes in the mining business, American Bitcoin, where Eric Trump is chief strategy officer, and paid $500,000 to join the Executive Branch, a new MAGA-adjacent social club in Georgetown whose founding members include Donald Trump Jr., Sacks and prominent lobbyist Jeff Miller, according to a person familiar with the matter.

Their new political sway came into focus during a recent campaign to derail Trump’s nominee to run the Commodity Futures Trading Commission, Brian Quintenz.

The twins asked the White House to stop or delay Quintenz’s confirmation process, arguing that Quintenz was not enough of a crypto true believer, Bloomberg News previously reported. Their efforts were seen, within the industry, as a potential reason a Senate committee paused a vote on Quintenz’s nomination in July and has not yet rescheduled it.

The White House reiterated its support for Quintenz after the delay. A White House spokesman did not respond to a request for comment. Quintenz declined to comment.

Gemini’s Losses

While Trump’s policies have bolstered the twins’ personal fortunes, they don’t appear to have helped Gemini’s bottom line.

The company’s net losses in the first half of this year — $282.5 million — were almost seven times as large as the same period a year earlier. And despite its relatively long history in the industry, Gemini has struggled to catch up with larger rivals. It achieved a market share of around 3% of US trading during the 2021 crypto boom, but then fell below that for most of the past three years, before suddenly shooting up in the last few months leading up to the IPO, according to data from Kaiko.      

The exchange still earns most of its revenue through trading fees. But over time it has expanded to include an online market for the digital collectibles known as non-fungible tokens, a credit card that offers rewards in crypto, and a proprietary stablecoin tied to the value of the US dollar.

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While the rest of the stablecoin market has grown rapidly over the past year, the market cap of Gemini’s own stablecoin, GUSD, has fallen by almost half, according to CoinGecko. And the company’s longstanding push into derivatives trading has gained almost no traction. In recent days it had less than 0.1% as much open interest as the biggest exchange, Binance, according to CoinGecko.

The company’s lagging volume may be due, in part, to the fact that Gemini only trades 84 crypto tokens, compared to 317 at Coinbase and 495 at Kraken, according to CoinGecko. It has also been slower to introduce some new products — it does not, for instance, have its own proprietary blockchain like Coinbase and Kraken.

Gemini’s commitment to rule-following in the more stringent regulatory regime before Trump took office may have slowed it down, said Matthew Hougan, chief investment officer at Bitwise, a crypto asset manager.

“I suspect the firm’s pro-regulatory alignment cost it growth opportunities,” Hougan said. “Firms that took more aggressive approaches to the market won market share.”

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Documents filed in advance of the IPO show that the company carried $1.5 billion of debt at the end of June — or almost half of its expected market value — with much of that coming from the brothers’ family office and other related parties.

Gemini said in its recent filing that it would use the money it raises through the IPO for “general corporate purposes” and for repayment of some of its “third-party indebtedness.”

Some industry watchers wonder if the IPO is just a way for the brothers to recoup some of their investment.

“I would be more enthusiastic if some elements of their strategic plan were shared,” Campbell Harvey, a finance professor at Duke University, said. “Why do they need to raise the capital? Is it just a liquidity event for the current owners?”

The twins own all of the company’s class B shares, which hold 10 times the voting power of the common shares being marketed to IPO investors. That’s given them a combined 97% voting stake in Gemini ahead of the IPO, according to the amended registration statement.

In an updated registration filing released Wednesday, Gemini disclosed that after the IPO upsize, the twins were expected to receive about 35 million Class B shares in exchange for about $700 million in outstanding convertible loans still owed to them by Gemini. At the top of the IPO range, those shares would be worth over $900 million.

For the sake of the upcoming IPO, the business details may not matter to the retail investors who have clamored for shares of crypto companies. Bullish, another exchange, soared over 80% after it went public in August, turning its two largest holders into billionaires — though it has fallen since then. Gemini is allocating an unusually large share of its IPO — some 30% of it — to retail brokerages like Robinhood.

At a Bitcoin conference earlier this year, shortly after their visit to the White House, Cameron Winklevoss mused to his brother about how much things had changed in just one year.

“A year before that, you thought it was much more likely that you’d be in the jail house than the White House,” he joked.

–With assistance from Anthony Hughes and Elena Mejia.

(Updates with details from new registration filing in thirteenth paragraph.)

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