Crypto's Hotel California traps the Winklevoss twins

moneycontrol.com:

You can get into crypto any time you like, but can you ever leave? A fierce $900 million Bitcoin feud between the billionaire Winklevoss twins and Barry Silbert suggests the virtual currency bubble’s main legacy is a version of Hotel California, with clients desperately hoping for fresh money to pick up the tab — or a change in management that will let them check out.

At the heart of the dispute is a crypto lending business that blew up in spectacular fashion last year after bringing Cameron and Tyler Winklevoss and Silbert together. As relatively early Bitcoin adopters, the moguls no doubt recognized one big challenge in crypto: How to earn money from a pile of virtual tokens with no intrinsic value.

The result was a cottage industry of platforms, including the Winklevii’s Gemini Earn. Gemini took crypto from depositors and lent it to Silbert’s crypto brokerage Genesis, which in turn entrusted it to investors including Three Arrows Capital (3AC) looking to juice returns. In the frothy times of everything going up, everyone checked in: Eye-popping interest rates of 7 percent, the promise of instant withdrawals and the names involved meant few really read the fine print.

But when markets went south, the new structure became yet another gilded cage: Everyone wanted to leave but nobody could settle the bill. When 3AC went bankrupt in July, Silbert’s Digital Currency Group had to cover some of Genesis’ debts with a $1.1 billion promissory note, while FTX’s downfall in November meant platforms everywhere froze withdrawals — including Gemini and Genesis. More than 340,000 Gemini Earn customers are trapped in limbo, owed $900 million by Genesis.

Ordinarily, absent a white knight or magic bundle of outside cash, one might