Author: Lyv; Bruce Shen; Felix Xu, Fintech Vanguard
Founded by the Winklevoss brothers, the compliance-focused cryptocurrency exchange Gemini has recently officially listed on NASDAQ (ticker: GEMI), becoming the third publicly traded cryptocurrency exchange in the U.S. after Coinbase and Bullish, raising approximately $425 million, with a positive market response. On its first day of trading, GEMI's stock price surged by 45% at one point, ultimately closing up over 14%, with a market capitalization reaching $3.8 billion.
Gemini has positioned itself as "compliance-first," but now faces a stark reality: a net loss of $282.5 million in the first half of 2025 and a long-term negative operating cash flow, with a proposed IPO fundraising cap of about $317 million resembling a "debt repayment priority defensive battle." Despite its product matrix spanning spot/ institutional custody, offshore perpetual contracts, GUSD stablecoin, credit cards, and Nifty Gateway, it still lags behind Coinbase, Robinhood, and others in key metrics such as trading volume, monthly active trading users, and platform assets. "Compliance" has devolved from a premium label to an industry threshold. This article dissects key information from the S-1 filing along product and financial lines, providing a calm assessment of Gemini's competitiveness and investment value, helping to determine whether this "compliance exchange" is worth investing in.
Product and Revenue Engine (Parallel Lines)
As a compliance-focused U.S. onshore cryptocurrency exchange, Gemini's product and revenue engine presents a "parallel lines" structure. In terms of spot and institutional services, the retail side offers the Exchange App and ActiveTrader, while the institutional side includes Gemini Prime and custody (multi-signature, offline cold storage, compliance audits), with core revenue coming from trading fees and custody fees.
In retail pricing, the Gemini App ("Gemini model") charges a 1.49% trading fee + 1.00% convenience fee for Instant/Recurring orders (the convenience fee fluctuates with slippage, capped at 2%); Limit orders incur a 1.49% trading fee with no convenience fee. ActiveTrader employs a maker/taker tiered structure: for a 30-day trading volume of $10k, the maker fee is 0.20% / taker fee is 0.40%, dropping to 0.05% / 0.15% for $1m, 0.00% / 0.04% for $100m, and 0.00% / 0.03% for $250m. For institutions and custody, Gemini Custody® charges an annualized fee of 0.40% or $30/month per asset (whichever is higher), with an administrative withdrawal fee of $125; it is noted as "no minimum scale" (provided it covers the minimum monthly fee).
Compliance and security selling points include cold storage, multi-party control and role governance, ISO 27001 and SOC 2 Type 2 certifications, and disclosed hot/cold insurance limits (hot wallet $25M, cold storage $100M, totaling $125M). The institutional trading stack integrates Prime / eOTC / Exchange, serving hedge funds, family offices, and financial institutions, with eOTC supporting delayed net settlement and credit.
From a revenue structure perspective, retail primarily relies on fixed rates (App) + tiered rates (ActiveTrader); institutional business adopts a high volume, low fee traditional approach, lowering the overall take-rate, with trading fees still constituting the main revenue, accounting for about 2/3; custody fees are charged based on management and withdrawal fees, with capabilities like "instant trading from cold storage" enhancing institutional stickiness. The overall key point is that the security/compliance and cold storage capabilities on the institutional side create differentiation, while the high-tier volume (≥$100m) maker 0 / taker 0.04% offers price attractiveness to large clients but may dilute the average fee rate.
The derivatives segment is handled by the Gemini Foundation operating outside the U.S., positioned as a key lever to enhance trading depth and fee income, but it imposes higher requirements on compliance boundaries and risk control. The product form is linear perpetual contracts in non-U.S. regions (operating entity Gemini Artemis Pte. Ltd.), with contracts priced and settled in GUSD, featuring funding fees and liquidation/insurance fund mechanisms (liquidation transaction fee rate of 0.5%, funding fees calculated hourly); media reports indicate it initially offered up to 100x leverage. In terms of fees, the official Derivatives Fee Schedule employs a maker/taker tiered structure and sets negative/zero fee caps for large market makers. In compliance expansion, on May 9, 2025, it obtained a MiFID II investment services license from MFSA, planning to launch regulated derivatives (including perpetuals) in the EU/EEA; on August 20, 2025, it received a MiCA license, covering 30 European countries, further paving the way for derivatives and structured products. Its revenue mainly comes from maker/taker trading fees, 0.5% liquidation fees, and withdrawal/funding-related operational fees; funding fees essentially represent bilateral settlements between long and short positions, and the platform does not necessarily account for them as revenue. Overall, the "MiFID II + MiCA" dual-license path significantly reduces compliance uncertainty, aiding in attracting high-net-worth and institutional liquidity in Europe, but ultimate scalability still depends on liquidity introduction, risk management, and robust operation of the clearing system.
In terms of stablecoins, GUSD is issued by Gemini, pegged 1:1 to the U.S. dollar, benefiting from institutional dividends as U.S. stablecoin legislation progresses (such as the "GENIUS Act"), but remains smaller in scale compared to USDT/USDC. In terms of compliance and transparency, GUSD has been regulated by NYDFS since 2018, with Gemini stating that the 1:1 reserves consist of cash, government money market funds, and short-term U.S. Treasury bonds, with independent accountant verification published monthly, and reserve accounts earmarked for specific use. Scale comparison (reference volume): as of September 3, 2025, GUSD's circulating market value is approximately $51M; USDC is about $72B, and USDT is about $168B, showing a significant gap. If legislative progress materializes, it will generally benefit compliant stablecoin issuers, including GUSD.
Payment and credit card business is being advanced by Gemini in collaboration with WebBank and Mastercard. According to the card agreement document from February 2025, the credit card has no annual fee, with APR tiered based on creditworthiness and benchmark rates, and rewards credited instantly in cryptocurrency; Gemini states that residents of all 50 U.S. states can apply (subject to terms). Marketing has previously launched an XRP-themed page. In terms of incentives, cardholders can choose from various cryptocurrencies offered on Gemini for compliant spending, earning up to 40% back; they also receive up to 3% back on dining, 2% on groceries, and 1% on other purchases, with rewards automatically deposited into the cardholder's Gemini account. The revenue structure follows industry norms: interest margin/annual fees/penalties/various fees combined with interchange revenue sharing; within the Gemini system, WebBank acts as the issuer, with specific revenue-sharing ratios not disclosed. The strategic value of this business lies in expanding everyday payment touchpoints and strengthening brand penetration, with themed activities beneficial for customer acquisition and engagement.
In the NFT space, Gemini acquired Nifty Gateway in November 2019 and has since transformed it into Nifty Gateway Studio (NGS) starting in 2024, focusing more on collaboration and production with brands and creators rather than just a trading platform. In recent years, it has announced multiple collaborations with art projects, forming complementary content and ecological touchpoints with its main business. Overall, Gemini is leveraging a diverse matrix of "spot/institutional + derivatives + stablecoins + payment cards + NFTs" to integrate trading, custody, clearing, and compliance loops, simultaneously enhancing fee structures, institutional stickiness, and brand touchpoints, aiming to improve long-term revenue resilience under the combined effects of compliance dividends and product depth.
Competitive Landscape and Market Share (Exchange)
Gemini occupies a position in the "top tier but not the first echelon" of compliant spot exchanges. According to Kaiko's comprehensive ranking, in the spring of 2025, its spot market share rose from about 1% to 2%, exhibiting an "advance two steps, retreat one step" elastic characteristic, with a temporary increase followed by a partial retraction, reflecting both upward momentum and volatility in the compliance track.
In horizontal comparison, Coinbase remains the leader in U.S. stocks, with clear advantages in integrated retail and institutional operations, and the synergy with options and other derivative businesses brings stronger economies of scale and brand premium; Kraken, as a long-established compliant exchange in the U.S., has deep roots in the EU market, with a more solid regional layout. On the retail entry front, Robinhood's acquisition of Bitstamp (announced in 2024, completed in 2025) has filled its institutional and globalization capability gap, further intensifying competition for retail entry in the U.S. compliant market.
In the primary market, Bullish successfully went public in 2025, enhancing capital market risk appetite and valuation references for "compliant exchange" assets, which also holds certain implications for Gemini's future potential issuance windows. In this landscape, our view is that Gemini's market share and ranking are not in the first tier, and the differentiation of its exchange business products and services is very low; although it emphasizes "compliance," compared to other U.S. competitors, its scale is too small to have a sufficient edge.
User Reputation and Product Richness
From the perspective of user reputation and product coverage, Gemini's listings and available regions are positioned among mainstream compliant platforms: currently supporting over 70 cryptocurrencies and serving over 60 countries (source: S-1/Reuters). In terms of app ratings, third-party evaluations show an App Store rating of 4.8/5 and a Google Play rating of 4.3/5, with overall good performance in mobile experience and stability; however, on Trustpilot, reputation is notably polarized, with negative feedback concentrated on risk control triggers and customer service response times, indicating that user communication and process experience under its compliance segment still have room for improvement.
In terms of product richness, Gemini's product line is "broad and comprehensive": it includes institutional custody and trading stacks, while also synchronously laying out derivatives, credit cards, stablecoins, and the NFT ecosystem, forming a relatively complete business matrix. However, in terms of depth and activity (such as order book thickness and institutional market-making coverage), there remains a visible gap compared to first-tier platforms—this not only affects the bargaining power of fees but also directly relates to unit economics. Given that the S-1 currently lacks sufficient disclosure on key operational metrics, continuous follow-up on its liquidity introduction, institutional cooperation, and fee structure improvements is necessary.
History and Business Status
Gemini was founded in 2014 by Cameron and Tyler Winklevoss in New York, with the main entity being Gemini Trust Company, LLC. On October 5, 2015, the New York Department of Financial Services (NYDFS) granted it a Limited Purpose Trust license under the New York Banking Law, thereby establishing a foundational path of "security/compliance first." In terms of compliance and auditing, Gemini completed a SOC 2 Type 1 audit executed by Deloitte in 2018, and on January 19, 2021, it simultaneously passed SOC 1 Type 2 and SOC 2 Type 2 (covering the exchange and Gemini Custody), positioning itself early on with a "compliance model" mindset to differentiate from peers.
In terms of related parties and business cooperation, the company signs service agreements with entities jointly held with WCF (such as Elysian, Salient, WCM) to obtain key operational support such as equipment leasing, cloud services, data centers, and management consulting; for the C-end and payment ecosystem, it collaborates deeply with multiple parties: first, it links with Ripple's business to expand Ripple USD (RLUSD) as the base currency for all spot trading pairs on the platform and jointly launched an XRP rewards credit card; second, it partners with WebBank, which acts as the issuing bank for the XRP co-branded credit card, expanding crypto payment application scenarios and customer touchpoints within a compliance framework.
Operating Scale (Media Transcription of S-1 Disclosure for Reference)
Platform Size (as of 2025-06-30)
Cumulative Trading Volume (lifetime trading volume) ≈ $285bn;
Assets on our platform/AUC > $18bn;
Monthly Trading Users (MTUs) ≈ 523k; Institutional Clients ≈ 10k;
Cumulative Processed Transfer Amount > $800bn.
The above figures are reported by multiple authoritative secondary sources referencing S-1 excerpts/databases: Investopedia, Renaissance Capital/IPO-Scoop, Investing.com, etc.
Product Coverage Supplement (S-1/DRS Excerpt): Supports 80+ trading assets, Custody covers 130+ assets (as of 2025-06-30).
S-1/A Filing Index (for original verification): SEC EDGAR CIK: 0002055592 (latest S-1/A index page).
Financial Condition Analysis: Growth Cannot Hide Losses, Heavily Dependent on External Infusion
Performance Overview: Severe Losses
2024 Operating Data: Showed growth trends, achieving 512,000 monthly trading users, with an annual trading volume of $38.6 billion and platform custody assets reaching $18.2 billion.
Sustained Huge Losses: Growth was severely offset by significant losses. In 2024, a net loss of $159 million was recorded.
- Losses Worsened in the First Half of 2025: The company achieved revenue of $68.6 million, processing $24.8 billion in spot trading volume, but the net loss during the same period reached as high as $282.5 million.
Asset-Liability and Cash Flow Situation
Operating Cash Flow Remains Negative: The company's main business has not yet achieved self-sustainability. The operating cash flow for 2024 was -$109 million, and for 2023, it was -$207 million, primarily due to adjustments for non-cash items and changes in working capital.
Cash Reserves (as of 2024/12/31): Holding cash and cash equivalents of $42.8 million, with restricted cash of $28.4 million.
Customer Funds Segregated: Customer custody funds amount to $575.6 million, which are segregated and used solely for customer interests, reflecting its efforts in asset security and compliance.
Survival Model: Reliance on External Infusion
High-Risk Financial and Asset Strategy:
Bitcoin "Vault Asset" Strategy: The company treats BTC as a core reserve asset, preferring to finance through dollar debt rather than directly selling BTC. This can alleviate cash pressure in a bull market but also amplifies cyclical risks during market downturns.
Historical Risk Resolution ("Earn Incident"): Under the regulatory requirements of NYDFS, Gemini has returned over $2 billion in crypto assets to Earn users and paid a $37 million fine. Although costly, this essentially resolved the historical issue, repaired some reputation, and reduced contingent liability risks.
Funding Sources: Multi-Party Credit Support to Maintain Operations:
Core Support from Founders' Fund (WCF): As of the end of 2024, the company's survival heavily relies on WCF's continued "infusion," including:
Unpaid cryptocurrency loans: 5,054 BTC, 26,629 ETH
Unpaid dollar principal: $116.5 million
WCF also holds all convertible bonds issued by the company.
External Credit as Supplement: Obtained a $75 million credit line from its strategic partner Ripple as additional liquidity support.
Future Plans: IPO Focused on Debt Repayment
The funds raised from this IPO will primarily be used to repay third-party debts to optimize the capital structure and reduce leverage.
Summary
Gemini's financial condition is concerning, with huge net losses largely driven by non-cash or highly volatile items, such as fair value adjustments of related party convertible bonds, borrowing interest, and fair value changes of held crypto assets.
The company has long relied on external infusion from the founders' fund, and the purpose of the IPO financing is to prioritize repaying third-party debts. However, the $400 million financing amount still cannot fully cover all company debts, and the company's operating cash flow averages an outflow of $100-200 million per year, meaning the funds raised from the IPO can only support the company's operations for two years.
Operating Data and Peer Comparison: Significant Gaps
Analysis of Gemini's Own Operating Status
Operating Data: In terms of user numbers and trading volume, Gemini achieved relatively moderate increases in 2024. Monthly trading users grew from 448,000 in 2023 to 512,000 in 2024, and total trading volume increased from $12.5 billion to $38.6 billion. Platform assets also saw significant growth, rising from $9.1 billion to $18.2 billion.
Profitability: However, despite the improvement in operating data, Gemini's profitability still faces severe challenges. Although EBITDA improved slightly from -$110,000 in 2023 to -$13,000 in 2024, it remains negative. This means that Gemini's revenue cannot cover various operating costs, including employee salaries, and the path to profitability remains unclear, raising concerns about profitability.
Comparison with Peer Operating Data
Trading Volume:
Gemini's trading volume is far lower than that of Coinbase and Bullish. Coinbase's trading volume reached $1.162 trillion in 2024, Bullish at $547 billion, while Gemini was only $38.6 billion.
Gemini's main revenue comes from retail, and although institutional trading has significantly increased, the total trading volume still lags far behind Coinbase.
User Scale:
Gemini's user scale is significantly smaller than that of Coinbase and Robinhood. Coinbase had 8.4 million monthly trading users in 2024, Robinhood had 25.2 million, while Gemini had only 512,000.
The gap compared to Coinbase and Robinhood in user numbers is very large.
Profitability:
Both Coinbase and Robinhood achieved profitability in 2024 (with positive EBITDA), while Gemini's EBITDA remains negative.
Coinbase shows an absolute advantage in profitability.
Platform Assets:
The platform assets of Coinbase and Robinhood are far higher than those of Gemini. Coinbase's platform assets were $404 billion in 2024, Robinhood's were $193 billion, while Gemini's were only $18.2 billion.
Summary
In summary, while Gemini has experienced growth, there are still significant gaps in market share, user scale, and profitability compared to major competitors, necessitating further enhancement of its profitability and market competitiveness. Therefore, the company's core competitiveness is not reflected in market share but rather in its differentiated compliance strategy.
Core Team
Founders and Background
Key Figures: The company was founded and is led by twin brothers Cameron & Tyler Winklevoss. They are well-known for their early legal disputes with Mark Zuckerberg over the founding rights of Facebook and became early investors in Bitcoin and staunch advocates for cryptocurrency through their settlement funds.
Continuous Entrepreneurship and Investment: Before founding Gemini, they established Winklevoss Capital in 2012 as their family office and venture capital tool. Through this company, they actively invested in numerous cryptocurrency and technology startups, building a broad industry ecosystem network.
Political Involvement and Policy Lobbying
Public Support for the Trump Campaign: The Winklevoss brothers are among the most prominent supporters of Donald Trump in the cryptocurrency industry. In 2024, they each donated Bitcoin worth $1 million to Trump's campaign and publicly criticized the Biden administration's "war on crypto," arguing that its regulatory policies are stifling innovation.
Systematic Political Donations and Lobbying: Their donations are not isolated acts but part of a wave of political contributions amounting to $190 million from the cryptocurrency industry. According to reports from the Financial Times and other media, the Winklevoss brothers, along with key figures from companies like Coinbase, Ripple, and a16z, have invested heavily through Super PACs to systematically influence the political landscape in the United States.
Summary: Investment Value at the Bottom of the Vertical Track
Although Gemini has taken the lead in compliance and has worked hard to build a diversified product matrix of "spot + derivatives + stablecoins + payments," a deep analysis of its financial condition, operational data, and competitive landscape reveals that its investment value is almost at the bottom of the vertical track of compliant cryptocurrency exchanges.
1. Diminishing Differentiated Advantage: Its "compliance" label is no longer a sufficiently wide moat in the face of giants like Coinbase and Kraken, which have also obtained regulatory licenses. The differentiation of products and services in the exchange business is extremely low, and Gemini's small scale makes it difficult to generate strong network effects and cost advantages. Its "compliance" selling point has not translated into sustained market share leadership or profitability.
2. Severe Financial Condition: Continuous and expanding massive losses, consistently negative operating cash flow, and a heavy reliance on "infusions" from the founders' fund all reveal the fundamental fragility of its business model. The primary purpose of this IPO is clearly aimed at repaying third-party debts, resembling more of a "lifeline" effort to maintain operations rather than a strategic expansion to drive future growth. The amount raised can only support the company's cash consumption for about two years, and the path to profitability remains distant and unclear.
3. Significant Operational Data Gaps: From an operational data perspective, the gap between Gemini and the track leaders is comprehensive. In terms of trading volume, monthly trading users, platform asset size, and profitability, Gemini is far behind competitors like Coinbase and Robinhood, with a substantial disparity. As Robinhood acquires Bitstamp, market competition will intensify further, continuously squeezing the survival space for second-tier players like Gemini.
Therefore, for investors seeking to invest in compliant cryptocurrency trading platforms, Gemini is not an ideal target. Allocating capital to market share solid leaders like Coinbase, Kraken, and Robinhood, which have more resilient business models and have demonstrated profitability, is undoubtedly a more prudent and wise choice.
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