Gemini Space Station Inc. (GEMI) announced on Thursday that Winklevoss Capital Fund has injected $100 million into the company, funded entirely with approximately 1,258 bitcoin. The investment, which closed the same day, saw the fund acquire 7,142,857 Class A shares at $14 apiece, according to a regulatory filing.
The news sent Gemini's stock soaring about 15% in after-hours trading, though shares remain well below their September IPO price of $28. GEMI closed Thursday at $5.26, a steep decline from its debut levels. The company has been grappling with a challenging market environment, including a shareholder lawsuit filed in March alleging inadequate disclosure of its pivot to prediction markets.
Despite the capital infusion, Gemini's core exchange business continues to struggle. First-quarter exchange revenue fell 27% year-over-year to $17.2 million, with total trading volumes halving to $6.3 billion from $13.5 billion in the prior-year period. However, the company posted overall revenue of $50.3 million, a 42% increase, driven by growth in over-the-counter trading and nascent prediction markets.
Net loss narrowed to $109 million from $149.3 million in the same quarter last year, though operating expenses surged 73% to $144.5 million. The widening cost base has raised concerns among analysts, with Truist's Matthew Coad previously warning that management should prioritize survival over market share recovery during the ongoing crypto downturn.
Prediction markets, a relatively new addition to Gemini's offerings, generated $0.4 million in revenue in their first full quarter, attracting approximately 20,000 users. These markets allow trading on outcomes of future events such as elections and sports, distinct from traditional financial instruments. Tyler Winklevoss argued the market "significantly undervalued Gemini," while his twin Cameron highlighted the company's recent derivatives clearing organization license as a major milestone.
The license, granted in April, enables Gemini Olympus to clear fully collateralized futures, options on futures, and swaps, positioning the firm for a regulated end-to-end trading platform. However, the legal landscape remains uncertain. In April, New York's attorney general sued both Coinbase Financial Markets and Gemini Titan, alleging their prediction markets violated state gambling laws. Coinbase has called for federal regulation, while Gemini has not publicly responded.
With expenses outpacing revenue and core trading volumes declining sharply, the $100 million injection from the Winklevoss twins provides crucial runway. Investors will be closely watching management's Friday earnings call at 8:30 a.m. ET for clarity on how the funds will be deployed—whether to extend the company's cash runway, expand product offerings, or accelerate a path to profitability.
