Image: Michael Prince and Illustration: Yoshi Sodeoka for Forbes
Identical twin billionaires Cameron and Tyler Winklevoss saunter into their empty 17th-floor offices in Manhattan’s Flatiron district wearing designer high-tops, black jeans and matching sweatshirts made by the high-end streetwear brand Heron Preston. The sweatshirts—Cameron’s is red, Tyler’s white—are emblazoned with a Nasa logo, which the twins picked because it echoes the space-exploration theme behind the brand of their seven-year-old cryptocurrency trading operation, Gemini. In addition to being the Zodiac sign symbolised by twins, it was the name of Nasa’s second space mission—the one just prior to Apollo 11, which put the first man on the moon.
“We actually call our employees astronauts,” Cameron says. “We’re all astronauts building on the frontier of money and the frontier of art and the frontier of finance.” Accustomed to finishing his brother’s thoughts, Tyler chimes in: “We feel like we’re on a spaceship, exploring a new frontier.”
On this sunny March day, the spaceship is hitting warp speed. The price of Bitcoin is about to reach an all-time high of $58,000 (it sold for $8 in 2012 when the brothers began investing some $10 million in the digital currency), rocketing their combined net worth to $6 billion. Their latest investment, fast-growing Bitcoin lending giant BlockFi, just announced it has raised $350 million, valuing the company at $3 billion.
And the 39-year-old brothers’ hottest venture, digital art auction platform Nifty Gateway, is basking in the glow of a sale at Christie’s, where the gavel is about to fall on the 255-year-old auction house’s first-ever sale of a non-fungible token (NFT) artwork, a one-of-a-kind computer file tracked on a digital ledger known as a blockchain. Nifty Gateway put the artist, Mike Winkelmann, who goes by Beeple, on the map through a series of “drops” starting last year. Before the day ends, Gemini’s custodial business, which houses digital assets securely, will receive a $69 million cryptocurrency payment for Beeple on behalf of Christie’s, making his “Everydays: The First 5,000 Days” the third-most-expensive work sold by a living artist, after Jeff Koons and David Hockney.
Much of the world still thinks of the 6-foot-5 twins as the crew-rowing chumps played by Armie Hammer in The Social Network, the hit 2010 movie about Facebook. At Harvard, classmate Mark Zuckerberg had swiped their idea for a social networking site, building an empire with 2.8 billion worldwide users and a personal fortune now worth $97 billion. A dozen years after they settled with Zuckerberg for $65 million in Facebook stock and cash, the Winklevii, as they are widely known, have emerged as leaders of a technological movement whose core operating principle involves digitising the records of all assets globally, decentralising control and cutting out gatekeepers—including Facebook.
Blockchain, the technology underlying Bitcoin and other cryptocurrencies, is already disrupting money and banking, as giant financial firms such as PayPal, Square, JPMorgan, Fidelity and Northern Trust embrace Bitcoin and jockey for position in a future awash in digital assets. At the same time, big companies including Boeing, Samsung, Tesla and Novartis are using the new technology to improve their supply chains, share customer data and speed up business processes. In some cases, they’re adding Bitcoin to their balance sheets. In 2020, Bitcoin returned more than 300 percent, against 18 percent for the S&P 500.
Within 24 hours of meeting with the Winklevoss twins in 2019, Griffin (left) and Duncan Cock Foster had received an overture from Gemini to buy Nifty Gateway. The NFT auction house was recently valued at $1 billion
Image: Michael Prince for Forbes
The Winklevii say they’re just getting started. Through their holding company, Gemini Space Station, which owns their crypto exchange and Nifty Gateway, and via investments made by their family office, Winklevoss Capital, the duo have invested in no fewer than 25 digital-asset startups. These fledgling companies are laying the foundation for what the brothers hope will be a new virtual world that they and others call the “metaverse”, in which digital assets like art, music, real estate and even entire businesses are created, bought and sold—and, most importantly, governed—by the blockchain. Many of the companies they’re backing are positioned to thrive in this three-dimensional version of the internet ruled via peer-to-peer computer networks, where participants rather than powerful companies profit.
“The idea of a centralized social network is just not going to exist five or 10 years in the future,” Tyler predicts when asked about Facebook. “There’s a membrane or a chasm between the old world and this new crypto-native universe. And we’re the conduit helping people transcend the offline into the online.”
The fact that two Greenwich, Connecticut–raised men of Harvard, both former Olympians, find themselves at the centre of an anti-establishment movement whose most notable use case to date has been a thriving online bazaar selling illegal drugs speaks volumes about how far the Winklevii have come from their days in Cambridge, Massachusetts, grappling with Mark Zuckerberg.
After settling their arbitration with Facebook and competing in the 2008 Olympics in Beijing, the Winklevoss brothers headed to Oxford University to earn their MBAs in 2010 and then formed Winklevoss Capital to make venture investments. Eager to join the cadre of firms on Sand Hill Road funding today’s great technology companies, the twins soon realised they were effectively shunned in Silicon Valley. Startup after startup, fearful of reprisals from juggernaut Facebook and its growing network, refused to take their capital.
As recounted in Ben Mezrich’s 2019 book Bitcoin Billionaires, it was during a vacation in Ibiza in June 2012 that the twins were first introduced to Bitcoin by early adopters who, like the Winklevii, were traditional-tech outsiders. The notion that money was the ultimate social network, and that Bitcoin was free from central-bank control and backed by mathematical certainty, appealed to the highly disciplined athletes.
After the brothers returned to New York, they began using their Facebook money to buy up Bitcoin. “We found the community super-welcoming,” says Tyler, who tends to be the more analytical twin. (Cameron is the more creative.)
In May 2013, they invested $1.5 million in a Brooklyn-based exchange called BitInstant, which charged people a fee to exchange dollars for Bitcoin in just minutes. The business grew rapidly—reportedly accounting for 30 percent of all Bitcoin purchases. Unfortunately, some of those purchases were laundering money for drug dealers selling on the dark-web drug bazaar Silk Road, and by the end of the year the site was shuttered. Its computer-genius CEO, Charlie Shrem, whom the Winklevii embraced, was arrested and spent a year in federal prison for running an unlicenced operation.
“We very much saw ourselves in Duncan and Griffin [far right],” says Tyler (second from right) of the Cock Foster twins. “These guys had this passion, this conviction, and everyone around them was saying they were crazy. That’s how we felt our whole life.”
Image: Michael Prince for Forbes
Facing another brush with ignominy, the brothers decided that if they were going to succeed in this nascent marketplace they needed to be hands-on—and, more importantly, they needed to bring order to a chaotic, unregulated industry. In 2014, they founded their own cryptocurrency exchange, Gemini.
In the early days, Gemini was little more than a place to buy and sell Bitcoin, but today it offers trading and custody for 33 cryptocurrencies, including ether, a coin equipped with a native computer language that lets developers build applications without central servers; zcash, a privacy-protecting token based on Bitcoin; and mana, the native cryptocurrency of a virtual-reality world called Decentraland. The twins also have their own ethereum-based token called Gemini Dollar, which is pegged to the value of the US dollar and therefore stable.
Among crypto exchanges (there are now more than 300), Gemini became, in October 2015, one of the first Bitcoin-focussed financial institutions to be designated a trust bank by the New York State Department of Financial Services. This meant it was subject to the same regulatory requirements as banks like State Street and Northern Trust and enabled it to take deposits in all 50 states.
Though Gemini’s trading volume ($29 billion in the last 12 months) is much lower than that of giants like Binance and Coinbase, it rivals them in industry “trust” scores. Given the current environment of nosebleed valuations like Coinbase’s $68 billion, Gemini could likely fetch $5 billion if it ever needed outside funding.
While Facebook’s early corporate mantra was “move fast and break things,” the Winklevii, who famously asked then–Harvard president Larry Summers to enforce the college’s “Standards of Conduct” against Zuckerberg, have always operated under an “ask permission first, not forgiveness later” ethos. A poster on the wall of their office from Gemini’s recent New York subway marketing campaign depicts the Founding Fathers of the US with the words THE REVOLUTION NEEDS RULES.
Heavily promoting its operation as the “regulated” crypto exchange, Gemini is positioning itself to profit when the Securities and Exchange Commission finally approves crypto exchange-traded funds, already approved in Canada and overseas. Starting in 2013, the Winklevii began applying to the SEC to launch a Bitcoin ETF. So far they’ve been turned down twice, last in 2018, over “the immaturity of the industry”.
Today, there are six crypto ETF applications pending at the SEC from the likes of Wisdom Tree, Van Eck, Fidelity, First Trust and Anthony Scaramucci’s Skybridge Financial. Gemini, which now offers customers a Bitcoin rewards credit card and a savings account that pays 7 percent interest on crypto deposits, has an application pending with the SEC to open an alternative marketplace for trading stocks and other securities issued on a blockchain.
“Gemini is the bridge where people can migrate away from centralised finance, from their current bank, and into this new world,” Cameron says. “Our business model is not based on information or monetising privacy. It’s based on marketplaces and trading fees.”
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(This story appears in the 07 May, 2021 issue of Forbes India. To visit our Archives, click here.)