This analysis was first published in SvD Näringsliv, in Swedish, on January 12th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
They believed Mark Zuckerberg stole their social network idea. Now they claim a business partner has stolen their customers’ money. The Winklevoss twins saw crypto as a fresh start — but now they are stuck.
Imagine Swedbank promised its customers around 7 percent interest on a special account, with the freedom to withdraw at any time. An attractive offer for most people.
To deliver that return, Swedbank needs to lend the deposited money to SEB. SEB in turn makes higher-risk investments, aiming to earn more than the 7 percent. The margin is split between the banks — everyone is happy.
Then something happens. It turns out SEB has lost the deposited money and refuses to pay it back. Swedbank is furious. Its customers are furious. And now Swedbank and SEB are fighting each other, very publicly, on Twitter.
None of this has anything to do with Swedish banks.
Swedbank in this scenario is Gemini — a crypto exchange founded by Cameron and Tyler Winklevoss, known from the film The Social Network. On the other side is Genesis Global, a crypto trading platform owned by the conglomerate Digital Currency Group (DCG). The Winklevoss brothers are the latest in a long line of prominent figures caught up in the storms that swept through the industry in 2022.
In total, around 9 billion kronor is missing from roughly 340,000 Gemini customers — and the atmosphere is deeply hostile.
The Winklevoss brothers say they tried to resolve the situation directly with DCG’s CEO Barry Silbert. When those talks broke down, they took to Twitter and resorted to open letters instead. Silbert’s position is that they owe Genesis nothing until 2032. The standoff remains unresolved, and there is a palpable sense of desperation in the air.
The dispute says a great deal about the state of the crypto market more broadly. In the chase for fast, high returns, enormous risks were taken — risks that stayed hidden as long as prices kept climbing.
For its own customers, Gemini described its lending partners as having been “evaluated with our risk management framework.” That may well have been true. But when 9 billion kronor disappears, perhaps the framework itself deserves a review.
Like the 2008 financial crisis, crypto markets were interconnected in ways that were not visible to individual participants. The collapses of FTX, BlockFi, 3AC and Celsius cascaded through the industry on multiple levels. Enormous amounts of capital were wiped out in direct losses as trading partners failed. The crashes drove the prices of many cryptocurrencies sharply lower, reducing the value of whatever holdings remained. And finally, trust in the market eroded — making recovery that much harder.
The Winklevoss brothers once used their settlement money from the Facebook dispute to invest heavily in crypto through Winklevoss Capital. It was meant to be a fresh start — and for a time, they presented themselves as serious, visionary entrepreneurs in a new and open market.
In an article on their site from 2020, they wrote that the price of Bitcoin could reach $500,000. At the time of writing, it is just under $17,500. Their company description also states that “those who dare to fail greatly, dare to achieve greatly.”
The Winklevoss brothers are perhaps used to turbulence by now. But when 9 billion kronor goes missing, it is doubtful their customers feel quite the same way.
