Written by: Protos Staff

Translated by: Wu Talks Blockchain

TL;DR: Key Points from Gemini's 10-K Report and Internal Lending Cycle

· Funds Shuffled: The founder's WCF lent cryptocurrency assets to Gemini, which subsequently pledged them to a third party to obtain a USD loan, creating an internal lending cycle.

· Low-cost Control Harvesting: During the IPO, the founder's debt was converted to super voting shares at a 20% discount. Retail investors bought at a high price, while the founder firmly controlled 94.7% of the voting power.

· Sword of Damocles: Although Deloitte issued an unqualified audit report, WCF could withdraw up to 4,619 BTC in borrowings at any time, putting the exchange's liquidity at risk.

· Market Cap Avalanche: Since going public, the stock price has plummeted 88% (to $4.42), with several top investment banks downgrading it to a "sell" rating and facing a class action lawsuit.

· Core Conclusion: Gemini's operating model favors the founders' interests and relies on related-party funding, which has collapsed in the secondary market, facing a severe governance and trust crisis.

Cameron and Tyler Winklevoss lent thousands of Bitcoin ($BTC) and Ethereum ($ETH) to their cryptocurrency exchange Gemini through their private investment company, Winklevoss Capital Fund (WCF). Subsequently, Gemini pledged these cryptocurrency assets to Galaxy Digital and NYDIG to raise USD loans.

In September 2025, the exchange went public at a price of $28 per share, converting $695.6 million of WCF debt into B-class shares with super voting rights at a 20% discount, giving the twin brothers direct control of 94.7% of the voting rights at Gemini.

Yesterday, the submitted Gemini 10-K document detailed this complete operational structure. Social media users referred to it as a "circular operation."

Post from X platform:

This is entirely a circular Ponzi scheme:

Borrow BTC from related party WCF; pledge those BTC to lending institutions for USD loans (involving Galaxy, bond issuance, NYDIG).

Some of the loans were settled in discount stock during the IPO.

Moreover, there are more operations (involving Ripple and RLUSD, convertible bonds, etc…)

Deloitte issued an unqualified audit report: there were no Key Audit Matters (KAM), and there was no mention of related-party transactions, liquidity, or going concern issues…

How are these operations legal?

The Lending Cycle of Winklevoss Capital Fund

Here is the basic flow of funds. WCF, owned by the Winklevoss brothers, lent BTC and ETH to Gemini through an indefinite agreement.

Subsequently, Gemini provided these borrowed cryptocurrency assets as collateral to third-party lending institutions. Galaxy Digital provided a $116.5 million loan at an interest rate of 11–12%, with a collateral ratio of 145–155%. NYDIG offered $75 million via a repurchase agreement at an interest rate of 8.5%.

Gemini used this USD funding for daily operations and meeting regulatory capital requirements.

Upon completion of the IPO on September 15, 2025, the exchange used cash from net proceeds of $456 million to repay the $116.5 million owed to Galaxy.

Gemini is currently trading on Nasdaq, under the stock code GEMI.

The exchange also repaid $238.5 million under the Ripple warehouse credit facility; however, as of the end of the year, $154 million of Ripple debt remains outstanding.

However, the twins' own debt has not been settled in cash.

Gemini converted $200 million of WCF convertible notes, $475 million of WCF term loans, and accrued interest into 31.1 million shares of super voting B-class stock at a price of $22.40 per share.

This conversion price was 20% lower than the price paid by retail investors for equivalent A-class shares on the same day.

The only difference between A-class and B-class shares is the distribution of voting rights and ownership. Aside from that, their par values, dividend rights, and liquidation priorities are identical.

B-class shares can be converted into A-class shares on a one-to-one basis.

Retail Purchase Price was $28, while the Winklevoss brothers only paid $22.40

This discount is at the core of how this circular operation harms the interests of common shareholders.

WCF lent cryptocurrency assets to Gemini. Subsequently, Gemini pledged these borrowed assets to obtain more loans. Specifically, Galaxy and NYDIG lent USD funding for Gemini's daily operations.

Then, during the same IPO, Gemini issued equity to WCF at a discount price, while this IPO forced retail investors to bear a 20% higher entry cost.

Further reading: Insiders reveal that the Winklevoss brothers withdrew $280 million before Genesis collapsed.

The SEC's 10-K filing confirms that as of December 31, 2025, Gemini still owed WCF 4,619 BTC, valued at approximately $400 million.

In 2025, Gemini paid WCF $24.2 million in lending fees.

In summary, according to Nasdaq's corporate governance standards, Gemini simultaneously serves as debtor, custodian, and a "controlled company."

Despite being a publicly traded company, Gemini's co-founders still hold the vast majority of voting rights.

Additionally, according to data from Arkham Intelligence cited by crypto researcher Emmett Gallic, WCF stored approximately 8,757 BTC in Gemini Custody addresses.

Deloitte Issues Unqualified Audit Opinion

Deloitte provided an unqualified audit report for Gemini. However, the reality is that WCF has the right to demand repayment of this loan of up to 4,619 BTC at any time.

The twins could shake the foundations of this exchange, which they essentially control, with just a written notice.

Currently, Gemini's stock price in the secondary market has crashed 88% from its IPO price. "Gemini Space Station" is its legal entity name, implying a rocket launch, but clearly falls short of that promise, with an opening price of $37.01 on the first day of the IPO.

Today, it is only $4.42 per share.

Gemini set the IPO issue price at $28 on September 11, 2025. The next day it opened at $37.01 and hit a high of $45.89 before entering a continuous decline. After hitting a new 52-week low of $3.91 this Monday, it closed at $4.42 on March 31, 2026, down 88% from its IPO opening price.

The company's market value has collapsed from over $3.8 billion to about $520 million. Citigroup, Cantor, Truist, and Evercore have all downgraded the stock to a "sell" rating.

There are currently class action lawsuits accusing the company of misleading investors in its strategic planning.

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