It’s official: the Winklevoss twins are ready to bring bitcoin to Wall Street.
The Harvard-educated entrepreneurs — perhaps most famous for tangling in court with Mark Zuckerberg over the question of who founded Facebook — have finally won approval from New York regulators for their Gemini Trust to open a bitcoin exchange.
Gemini Trust, whose limited-liability charter will give it unique credentials to serve institutional clients beginning Thursday, waited for the seal of approval six months longer than its founders were hoping.
Tyler Winklevoss, who will serve as Gemini’s CEO, said the wait will be worth it for those seeking a safe alternative to exchanges like Mt. Gox, which famously imploded last year, taking the bitcoin assets of its roughly 750,000 customers with it down the drain.
Allegations of embezzlement surrounded Mt. Gox.
Bitcoin, a digital currency, hit a 52-week high in value at $421 last Nov. 12. It was changing hands on Monday at roughly $238.
Earlier this year, another key milestone in bitcoin history came and went when Ross Ulbricht, he founder of Silk Road, a bitcoin-based online market for drugs and other illicit goods, was sentenced by a Manhattan federal court judge to life in prison following his 2013 bust.
“I think we’re getting past that Wild West phase,” Tyler Winklevoss told The Post. “Silk Road has run its course.”
Indeed, Gemini says it will hold bitcoin deposits in an “offline (i.e., air-gapped) multi-signature, geographically distributed cold-storage system” — a wonky way of saying it’s taking extreme and sophisticated measures to protect clients against theft from hackers.
To maintain a tight ship for its user-friendly site, Gemini has hired security experts and financial engineers from top-shelf firms like Virtu Financial, Two Sigma, Bridgewater Associates, Google and Airbnb.
All currencies transferred to Gemini will be deposited in an as-yet-unidentified New York state chartered bank that’s headquartered in Midtown Manhattan, and eligible for backing by the Federal Deposit Insurance Corp.
Still, critics say even the most secure bitcoin exchange would face steep hurdles in trying to take the crypto-currency mainstream. For example, critics said, there has been of late talk of a possible “forking” that could create multiple bitcoin currencies.
The concern among some investors is that bitcoin, designed by an enigmatic computer genius who goes by the name of Satoshi Nakamoto, has a finite issuance, exposing it to commodity-like price squeezes.
“Anybody who doesn’t believe crypto-currencies are here to stay is wrong,” Cameron Winklevoss said, asked whether the recent conflict is a worry.
Still, in recent interviews the twins have appeared to back off bold language from last year, when they declared that bitcoin’s advantages over currencies, including the US dollar, would vault it to global prominence in the coming years.
“We’re not trying to build a business on one wave of hype or a big bubble,” Cameron Winklevoss told The Post. “We’ll try to build as big a splash as possible, but we’re also aware this is going to be a multi-year, multi-decade effort to build a long-term business with value.”
The twins have their work cut out for them, says Marc van der Chijs of Cross Pacific Capital Partners, a bitcoin-focused investment firm. Gemini’s exchange and trading platform will boast unique regulatory credentials and strong capital backing, but investors lately have gravitated toward non-currency-based applications of bitcoin’s so-called “blockchain” technology, he notes.
Goldman Sachs and JPMorgan Chase, for example, have deployed teams to develop their own platforms for trading sophisticated financial instruments using blockchain, which can verify transactions using complex encryption rather than a centralized authority.
“There’s not a lot of money to be made in currency exchanges, there are simply not that many transactions being done,” van der Chijs says. “Most are traders that pay zero fees, and it will be another two or three years or so before volume gets meaningful.”