Winklevoss Twins Targeting UK Expansion For Gemini Cryptocurrency Exchange
Anyone who has watched the film The Social Network, which covers the founding and early history of Facebook, will recall the controversial role of the Winklevoss twins. They claimed Mark Zuckerberg ripped off the HarvardConnection (later rebranded ConnectU) prototype social network platform they had created with another Harvard classmate Divya Narendra as the model upon which Facebook was built. As a bit of trivia, the twins, Cameron and Tyler, also represented the USA at the 2008 Beijing Olympics in the men’s pairs rowing event.
The eventually received $65 million for the litigation efforts, money they have subsequently put to use as online entrepreneurs and venture capitalists. The twins’ highest profile business venture since has been the Gemini Trust Company, their New York-based cryptocurrency exchange. It ranks as one of the top 100 in the world on volumes traded. Those investing online in the buying and selling of cryptocurrencies do so via exchanges like Gemini. Reports this weekend in the Financial Times said that Gemini has hired advisors to consult the exchange on the possibility of opening up a London-based cryptocurrency trading venue.
A cryptocurrency exchange works in basically the same way as any other financial exchange - acting as an intermediary and liquidity provider for traders buying and selling financial instruments or assets. In this case what are traded over the exchange are exclusively cryptocurrencies.
The governance standards of cryptocurrency exchanges have come under fire with many regulators and market analysts casting doubt on the accuracy of the trading volumes they report and many trade on the exchange on their own account. This is understandably held up as a potentially major conflict of interests. Last week the New York attorney general’s office also published a report on cryptocurrency exchanges that, as well as criticism of exchanges indulging in trading activities themselves accused them of not doing enough to prevent market manipulation. Rumours that influential cryptocurrency ‘whales’ regularly use the size of their holdings to manipulate cryptocurrency price swings have dogged the sector for some time now.
The Gemini exchange is, however, making a good fist of setting itself up as a best practise example of transparency and governance for a sector often described as a ‘Wild West’ financial market. Earlier this year the exchange hired the Nasdaq exchange as independent monitors of possible market abuse on Gemini. The company is also accredited by New York’s Department for Financial Services as a trust company.
Those investing online in cryptocurrencies have seen their fortunes reverse from last year’s phenomenal bull run, which saw bitcoin’s price rise from $1000 to $20,000 taking the values of other major cryptocurrencies along for the ride. The market has since seen the majority of those gains erased and bitcoin currently trades at around $6500.
Despite that steep correction many cryptocurrency advocates believe that the process of the digital currencies becoming integrated into mainstream financial markets has been making progress in the background. Goldman Sachs is, says the investment bank itself, still working on a proposed cryptocurrency trading desk though no expected launch date has been provided. NYSE-owner Intercontinental Exchange has also set up a start-up in partnership with Amazon and Starbucks. Bakkt, as it is called, aims to become a regulated bitcoin exchange.
It can be presumed that the Winklevoss twins are looking at London’s status as a global financial hub as the ideal location for a Europe-based cryptocurrency exchange as part of an international expansion in anticipation of a mainstreaming of the crypto trading market.
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