Crypto exchanges such as Gemini, founded by Winklevoss Twins are in the news again for close down accounts of two OTC trading desks seeking redemption of the exchange Stablecoin – GUSD.
Gemini’s overwhelming regulatory compliance approach is in conflict with the unregulated atmosphere and freedom to exchange which cryptocurrency has been historically focused on creating.
Users have come to question “business practices” at these exchanges.
Stablecoin markets are new
It has to be said that Stablecoins are new entrants to cryptomarkets and has yet to standardize and reach levels of marginal maturity. In the midst of its evolution, the fact that its value is now an unprecedented $3 billion cannot be ignored and has incidentally been the reason for the growth of these digital assets over others.
The first reported ‘annoying’ practice was the closing down of Latin American OTC desk account when it requested Gemini to honor redemption of GUSD worth several million.
Gemini’s reply to the request was “that a review determined [the] account must be closed…and it was not able to elaborate on the specifics for this decision.”
However, the problem lies in another fact.
Back in 2018, Gemini has pursued GUSD-adoption campaign and offered roughly 1 percent discounts to its power users such as OTC desks. However, the rider was that such purchases would have restrictions and there would be a “bar on them from immediately redeeming the assets.”
Yet, another ‘annoyance’ occurred when an OTC desk operating in US jurisdiction account was closed by Gemini because it had indulged in redeeming GUSD, worth millions of dollars.
The trader believes this move by the company was actually a Gemini plan to “maximize their status on CoinMarketCap.”
The aggressive stance by Gemini in shutting down accounts opting for the redemption of Stablecoin has spread fear among a majority of the traders. According to one such OTC trader, “he’s reluctant to redeem GUSD for fear of jeopardizing his account. So many players are unable to redeem, even very, very big OTC desks. Having an account doesn’t guarantee redeemability.”
However, Gemini states that,
“Gemini is a New York trust company. As a result, some potential customers will be unable or unwilling to pass our robust compliance program. This is a feature, not a bug, and what makes Gemini different. We understand this may frustrate some, but this is necessary to build trust in the future of money.”