Winklevoss Exchange Gemini Shuts Down Accounts Over Stablecoin Redemptions

From CoinDesk:

Two over-the-counter trading desks say their accounts at Gemini, the crypto exchange founded by U.S. investors Cameron and Tyler Winklevoss, were abruptly closed without explanation over attempts to redeem GUSD, the company’s stablecoin first introduced in September.

The claims leveled against Gemini by the OTC desks, relayed under anonymity due to fears of reputational damage, hint at the business practices developing within the stablecoin market itself, now estimated to be worth nearly $3 billion.

In one instance, email correspondence obtained by CoinDesk shows an OTC trader based in Latin America had his account closed after he informed Gemini that he planned to redeem several million dollars of GUSD. (A major cryptocurrency exchange, speaking on condition of anonymity, attested to the desk’s professionalism and reported that it was in good standing.)

Still, Gemini said in a statement to the trader that a review “determined [the] account must be closed” and that it was “not able to elaborate on the specifics for this decision.”
When contacted by CoinDesk, Gemini declined to comment on the incidents.

However, the actions may hint at how measures taken by Gemini to boost GUSD adoption have had unintended impacts in practice. In a bid to capture market share, Gemini issued roughly 1 percent discounts on GUSD in 2018 to OTC desks and market makers, who were then made to agree on restrictions that would bar them from immediately redeeming the assets.

According to the trader based in Latin America, Gemini pitched the company on a discount deal that offered his firm the ability to buy tokens at below market value. (The company declined because the desk wanted to obtain GUSD so that it could be transferred to fiat.)

When the desk later acquired GUSD from its own network, the trader said he was warned by Gemini staff that redeeming millions of dollars would harm the stablecoin....

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