The Winklevoss twins’ cryptocurrency exchange, Gemini Trust Company LLC, now offers insurance coverage for digital assets in its custody.
In a statement, the company noted that “a global consortium of industry-leading insurers” as arranged by financial solutions provider Aon is insuring the assets.
Yusuf Hussain, head of risk at Gemini, said, “Consumers are looking for the same levels of insured protection they’re used to being afforded by traditional financial institutions.”
Already, Gemini users are covered by the Federal Deposit Insurance Corporation (FDIC) for dollar funds kept in their accounts.
In a blog post, Hussain noted how insurers at present have been reluctant to offer their services to exchanges, due to “high-profile hacks” over the years that have exposed their vulnerability. According to Gemini executive, the premiums asked by insurers tended to be too high for exchanges to accept.
Hussain said, however, that “we were able to successfully demonstrate to insurers that Gemini, a New York trust company, is indeed a safe and secure exchange and custodian where customers can buy, sell, and store digital assets in a regulated, secure, and compliant manner.”
He added that “[e]ducating our insurers not only allows us to provide such protections to our customers, but it also sets the expectation for consumer protection across the crypto industry.”
According to the Gemini website, the majority of cryptocurrencies it holds are kept offline, in “cold storage,” with only a small portion of assets in its “hot wallet” online.
Insurance for losses due to hacks has also been offered by South Korean firm Hanwha Insurance, which has said it will be in discussions with exchanges in the country on whether such insurance will be made compulsory. South Korea has been the location of recent hacks, including one involving some $40 million worth of cryptocurrencies stolen from the Coinrail exchange, and another where about $30 million was stolen from Bithumb.
Kentucky-based cryptocurrency custodian Kingdom Trust has also offered insurance coverage as provided by Lloyd’s of London.
Gemini is reportedly looking to expand into the UK, as part of plans to establish a global presence.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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The US-based Gemini cryptocurrency exchange has its eye on global expansion. To help achieve its goal, it is reportedly looking to establish an office in the UK but no definite date has yet been provided. Gemini hasn’t come forth and confirmed that it was actively working on the UK operations, but two sources “close to the company” confirmed the move with the Financial Times yesterday.
The two sources said that the exchange, which was founded by the Winklevoss brothers in 2014, has already hired advisors to manage a possible UK expansion plan. Gemini has only said that it has no “immediate plans” to enter the market, adding, “[We] continue to explore potential jurisdictions around the globe to provide a best-in-class digital asset exchange and custodian which will enable growth and infrastructure to the entire digital asset community.”
One of the sources also indicated that Gemini is preparing to file an application with the UK’s Financial Conduct Authority (FCA), the agency that oversees the financial markets. That application is reportedly one of the steps necessary for the exchange to operate in the UK.
The timing may be perfect for Gemini. Last week, parliamentary members began to put pressure on the FCA to bring the crypto industry out of the “Wild West” environment in which it currently lives. While the FCA does not provide the framework for cryptocurrency regulation, except for a few crypto derivative products, its position as the financial watchdog gives it the ability to implement crypto guidelines. The move, argues the lawmakers, will help the UK to be seen as a global hub for the entire crypto industry.
Gemini has been in the news a lot lately. The company is behind several Bitcoin exchange-traded fund (ETF) proposals submitted to the US Securities and Exchange Commission (SEC), all of which have so far been denied. Only recently did the SEC agree to take a second, more serious look at the ETF proposals.
Additionally, the Winklevoss brothers have launched a stablecoin, the Gemini dollar, which is reportedly backed by the US dollar. The cryptocurrency was approved by the New York Department of Financial Services and will be held at a bank in the US that is “eligible for FDIC ‘pass-through’ deposit insurance.”
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Gemini’s Gemini dollar (GUSD) is able to be completely changed every 48 hours by a custodian. A study published by Alexey Akhunov, a cryptocurrency consultant, and Alex Lebed, a blockchain researcher, made the revelation last week, which supports previous assertions by Tyler and Cameron Winklevoss, the brothers behind the Gemini exchange and the Gemini stablecoin.
The study’s authors reviewed the stablecoin’s smart contract code in an effort to demonstrate that a GUSD implementation can become frozen or non-transferable without notice. This was mentioned in the token’s white paper, which says that the ability to pause, block or reverse any transfer is a basic principle of the token. The Winklevoss brothers said that it was necessary to allow for this to happen in order to counter any unforeseen circumstances. The white paper says, “[Gemini can] pause, block, or reverse token transfers in response to a security incident (i.e., catastrophic event).”
GUSD was implemented on the Ethereum blockchain as an ERC20 token. The authors of the study were interested in showing how the feature can independently be detected by users. They used an address that was found on Bitcoin Talk and in a Reddit thread and pointed out that there are “no trustless ways to know” that the address is Gemini’s only address.
A Gemini custodian is capable of generating an unlimited number of GUSD tokens. It can also manipulate the coin’s implementation every 48 hours, resulting in the coins becoming non-transferable. Akhunov and Lebed emphasize that such an ability does not offer “truly decentralized and censorship-resistant monetary systems.”
The two authors further state in their report, “This project has another single point of failure: the company. They can just say one day: ‘you know what, sorry, we don’t want to change your tokens for dollars anymore.’”
The new stablecoin, a direct threat to Tether, was introduced about a week ago after receiving approval by the New York Department of Financial Services. It is reportedly backed by U.S. dollars that are “held at a bank located in the United States and eligible for FDIC ‘pass-through’ deposit insurance, subject to applicable limitations.”
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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