Author|Protos Staff

Compiled by| Wu Says Blockchain

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

· Funding is Transferred Between Hands: The founder’s WCF lends cryptocurrency assets to Gemini, which then uses them as collateral to acquire dollar loans from third parties, forming an internal circular lending.

· Low-cost Control Acquisition: During the IPO, the founder's debt was converted into super voting stock at a 20% discount. Retail investors bought in at a high price, while the founders retained 94.7% of the voting power.

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

· Market Value Avalanche: Since its listing, the stock price has plummeted 88% (down to $4.42), being downgraded to "sell" by several leading investment banks and facing class action lawsuits.

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

Cameron and Tyler Winklevoss lent thousands of bitcoins ($BTC) and ether ($ETH) to their own crypto exchange Gemini through their private investment company Winklevoss Capital Fund (WCF). Subsequently, Gemini used this batch of crypto assets as collateral to borrow dollars from Galaxy Digital and NYDIG.

In September 2025, the exchange went public at a price of $28 per share, converting $695.6 million of WCF debt into Class B shares with super voting rights at a 20% discount, which enabled the twin brothers to directly control 94.7% of Gemini's voting power.

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

Attached is the post from X platform:

Everything is completely a circular Ponzi scheme:

Borrow BTC from the related party WCF; use these BTC as collateral to get dollar loans from lending institutions (involves Galaxy, bond issuance, NYDIG).

Some of the loans were settled in discounted stocks during the IPO.

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

Deloitte issued an unqualified audit report: no key audit matters (KAM), and they did not mention issues regarding related parties, liquidity, or viability...

How are these operations legal?

Winklevoss Capital Fund's Lending Cycle

Here is the basic outline of the fund's flow. Winklevoss brothers' WCF lends BTC and ETH to Gemini through an indefinite agreement.

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

Gemini uses this dollar funding for daily operations and to meet regulatory capital requirements.

By the time the IPO was completed on September 15, 2025, the exchange had used cash from $456 million in net proceeds to pay off the $116.5 million owed to Galaxy.

Gemini is currently traded on Nasdaq under the ticker symbol GEMI.

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

However, the twins' own debts were not repaid 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 Class B stock with super voting rights at a price of $22.40 per share.

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

The only difference between Class A and Class B shares is the distribution of voting rights and ownership. Other than that, the par value, dividend rights, and liquidation priority are identical.

Class B shares can be converted into Class A shares at a ratio of one to one.

Retail investors bought at $28, while the Winklevoss brothers only paid $22.40

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

WCF lent crypto assets to Gemini. Then, Gemini pledged these borrowed assets to acquire more loans. Specifically, Galaxy and NYDIG lent Gemini dollar funds for its daily operations.

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

Further Reading: Sources reveal that the Winklevoss brothers withdrew $280 million before Genesis collapsed.

The SEC's 10-K document confirms that as of December 31, 2025, Gemini still owes WCF 4,619 BTC, which is approximately worth $400 million.

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

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

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

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

Deloitte Issues Unqualified Audit Opinion

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

With just a written notice, these twins can shake the foundations of the exchange they effectively control.

Gemini's stock price in the secondary market has plummeted 88% from its IPO issue price. "Gemini Space Station" is its legal name, implying a rocket launch, but it clearly does not match its performance, with an opening price of $37.01 on the first day of the IPO.

Now the price is only $4.42 per share.

Gemini set the IPO issue price at $28 on September 11, 2025. The following day, it opened at $37.01, briefly reaching a high of $45.89, and since then has continued to decline. After hitting a 52-week low of $3.91 on Monday of this week, it closed at $4.42 on March 31, 2026, down 88% from the 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.

Currently, a class-action lawsuit has accused the company of misleading investors in its strategic planning.

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