Home News Exchange Gemini Exchange Shuts Down Two OTC Accounts

Gemini Exchange Shuts Down Two OTC Accounts

February 07, 2019 16:46
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In bizarre news of the day, it has emerged that two accounts belonging to over the counter (OTC) platform of the Winklevoss twins’ founded cryptocurrency exchange Gemini has been shut down.

The news was reported by news portal Cryptonomist which said that this was brought to light by the two account holders themselves, who preferred to keep their identity under wraps. The duo said that the termination of the accounts happened with no prior intimation from the exchange, but speculated that it might have happened as a result of attempting to redeem Gemini’s stablecoin GUSD.

One of the trader, whose only known identifier is that he hails from South America, said that he informed the exchange of his wish to redeem several million dollars of GUSD and it was after this, that his account was abruptly terminated.

While the exchange is yet to issue an official statement on the matter, one of the traders told news portal CoinDesknews portal CoinDesk that the exchange in an email had conveyed, “that a review “determined [the] account must be closed” and that it was “not able to elaborate on the specifics for this decision.”

While this may be confusing to individual traders, this is how Gemini meant to push forward the adoption of GUSD. In order to capture the market share, the exchange had 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.), as per the Coin Desk report.

However, when the desk acquired GUSD through its own network, Gemini warned the trader that the redemption can negatively affect the price of GUSD.

As we had earlier reported, that while Winklevoss twins projected their stablecoin project as an effort that will help in regularizing cryptocurrencies as a mainstream asset class, there was a study that disproved the theory. The theory stated that  GUSD is a tool that can put unprecedented power in the hands of Winklevoss brothers.

Alex Lebed, the researcher who reviewed the code of GUSD, clarified in full disclosure that he is associated with another stablecoin project. But that doesn’t mean what he published is a lie. According to him, the GUSD smart contract code includes a provision that allows its custodian (namely Gemini crypto exchange) to freeze any account.

So, seems like it is only a matter of time, before the two grows into a larger number. It is said that with greater power, comes greater responsibility, but if things were to go one way, the exchange might decide to do away with accountability unconditionally.

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