Gemini (GEMI.US) with the MAGA halo on top is about to be listed on US stocks. The question now is: Can the "Trump effect" still cover the financial black hole?

The Winklevoss brothers were boosted by the "MAGA" influence before their IPO in the US stock market, while Gemini (GEMI.US) losses continue to climb. In many ways, this should have been a crowning moment for Cameron and Tyler Winklevoss. Last year, this photogenic billionaire pair and their crypto company Gemini found themselves in a politically unfavorable position due to a collapsed lending product that led to a government investigation. However, the situation has reversed significantly, and the twins have become core players in the power dynamic between the crypto industry and the "MAGA" political camp of former US President Donald Trump. Now, the two brothers are capitalizing on this momentum, planning to raise up to $433 million for Gemini through a first public offering on the US stock market later this week. The so-called "MAGA," short for "Make America Great Again," is the slogan of Trump's enthusiastic supporters. However, this IPO has revealed a less optimistic reality: despite the appearance of wealth and success, the 44-year-old brothers are still struggling to catch up with competitors and turn their decade-old company into a profitable enterprise, facing ongoing difficulties. According to the prospectus, this IPO will value Gemini Space Station Inc. at around $3.1 billion, less than half of the business valuation in a round of financing in 2021. Gemini's market value has declined while its largest US competitor, Coinbase Global Inc., reaches new highs. However, this heavily loss-making exchange only accounts for a tiny portion of the trading volume in the US crypto market for example, according to CoinGecko data, Coinbase attracted about 25 times the trading volume of Gemini in recent days. Gemini has always relied on loans from the two brothers themselves, who hold about 80% of the company, according to a person familiar with the business who requested anonymity because their financial interests were not disclosed in the IPO filing. The contrast between public image and company performance reveals a larger narrative logic about the crypt world during the Trump era: even if wealth, political connections, and a company's fundamentals are barely related, the company can still capture Trump's endorsement with the "MAGA" label and attract investor funds with ease. This time, Gemini's listing will test how long they can keep these two aspects separate, and whether the brothers can narrow the valuation gap. Gemini's market share in the US crypto exchange market is much smaller than that of its main competitors. "They clearly have a close relationship with the Trump family," said Markus Thielen, CEO of 10x Research, in an interview. "But I don't see how that necessarily helps them. It's primarily an exchange. For an exchange, you need to drive higher trading volumes." Currently, with Tyler as CEO and Cameron as President, the twins are still betting on the political shift in the crypto field. In a relatively short time, they have shifted from regular Democratic donors to staunch supporters of Trump. In late August, the twins donated $21 million worth of bitcoin to a new political action committee called the Digital Freedom Fund, which will support Republicans and "supporters of the Trump presidency's crypto agenda," Tyler Winklevoss wrote on social media. He stated that their goal is to help Trump "usher in America's golden age." According to the Bloomberg Billionaires Index, friendly crypto policies implemented by the Trump administration have helped the twin brothers' large crypto asset portfolio appreciate, increasing their net worth to about $14 billion, an increase of about 60% since the election day. The regulatory climate has also created a favorable atmosphere for crypto market IPOs. Despite unimpressive performance metrics, Gemini's issuance has been oversubscribed, and according to media reports on Tuesday, the company has raised its expected price range for the public stock offering on Thursday afternoon. Gemini stated in a filing this week that its Nasdaq listing (symbol: GEMI) will receive $50 million in private investment. Crypto "converts" The Winklevoss brothers became one of the first public figures to openly announce their investment in Bitcoin a few years after rowing together at the Beijing Olympics. They first learned about the digital currency in a chance encounter on the beaches of Ibiza in 2012. At that time, the price of each bitcoin was less than $10, and they had just made a significant profit from their legal battle with Mark Zuckerberg over their role in the creation of Facebook. They started buying up 1% of all tokens in circulation, and when they publicly disclosed this in 2013, the purchase was worth about $11 million. With their private reserves now worth billions of dollars, they established Gemini the following year. In 2021, they raised $400 million in a round of financing, bringing the business valuation to $7.1 billion. In the early years, the brothers heavily promoted the importance of working with regulatory agencies in a campaign with the slogan "Revolution Needs Rules." Gemini was one of the first crypto companies to obtain a license in the state of New York. This was followed by the collapse of FTX and the market crash in 2022. Gemini and its lending partner Genesis offered a high-yield savings account-like product, providing returns on customers' crypto deposits. When Genesis went bankrupt, about $1 billion worth of customer tokens were frozen. Lawsuits and regulatory investigations followed. The project users of Gemini Earn eventually received full compensation. Gemini reached a $50 million settlement with the New York Attorney General and neither admitted nor denied any wrongdoing. However, the twins have become more critical of regulators and the Biden administration. "The previous government was threatening their livelihoods, threatening their business," said John Diaton, a Republican who initially supported the twins in their failed bid against Massachusetts Senator Elizabeth Warren in 2024. For the brothers, June 2024 was a turning point, as they attended a fundraising event for Trump hosted by David Sachs in San Francisco for about 100 people. Sachs, now President of AI and Crypto Affairs, later recalled that the appearance-focused Trump quickly noticed the "male model" brothers. "He picked you guys out," Sachs told the brothers during a fireside chat earlier this year. "I know you really created Facebook," Sachs recalled the president saying to them. "I know you didn't win that lawsuit, but it doesn't matter. Because you got a lot of cards. You're very wealthy. Very handsome." The brothers quickly became significant donors to the Republican party, donating so much to Trump's re-election campaign up to $1 million each that some funds were returned to avoid violating campaign finance rules. In a now well-known speech in July supporting crypto, Trump specifically thanked the brothers, calling them "the male models with huge and beautiful brains." Like many other insiders in the crypto community, the brothers benefitted immediately after Trump took office. The US Securities and Exchange Commission notified Gemini in February that it would end its investigation into the company (though it is still seeking a resolution to an SEC lawsuit). Less than a month later, the twins attended a crypto summit at the White House with the president, beaming with smiles, as Trump nodded to the high-intelligence individuals around him, like them. Unlike some in the crypto community who are trying to maintain relationships with both parties, the brothers have fully committed to the "Trump MAGA team." According to a source, they purchased shares in the crypto mining company American Bitcoin, which is led by Eric Trump as Chief Strategy Officer, and paid $500,000 to join the Executive Branch a new social club similar to MAGA, whose founding members include mini Donald Trump, Sachs, and prominent lobbyist Jeff Miller. Their new political influence was highlighted in a recent action that disrupted the appointment of Brian Quintenz as Chairman of the Commodity Futures Trading Commission (CFTC). The brothers had reportedly asked the White House to stop or delay Quintenz's confirmation process, citing his lack of devout belief in cryptocurrencies. Their efforts may have been one of the reasons why a Senate committee suspended Quintenz's nomination vote in July and has not rescheduled it. After a brief delay, the White House reiterated its support for Quintenz. A White House spokesperson did not respond to a request for comment. Quintenz declined to comment. Gemini's massive losses Although Trump's policies have increased the personal wealth of the twins, it seems they have not helped Gemini turn a profit. In the first half of this year, the company's net loss was $282.5 million, nearly seven times that of the same period last year. Despite having a relatively long history in the industry, Gemini still struggles to catch up with larger competitors in terms of volume. According to data from Kaiko, during the crypto boom in 2021, it had only a 3% market share in US trading, which was mostly below this level for the next three years until it suddenly surged in the months leading up to the IPO. The exchange's main revenue still comes from trading fees. However, over time, the business has expanded to include an online market for non-fungible tokens (NFTs), crypto-reward credit cards, and a stablecoin pegged to the value of USD. Despite the rapid growth of the stablecoin market over the past year, data from CoinGecko shows that Gemini's stablecoin GUSD market value has almost halved. Their long-pushed derivatives trading has also failed to gain significant traction. In recent days, their open interest contract size is less than one-thousandth of the largest exchange Binance, according to CoinGecko. The company's lagging trading volume may be attributed to the fact that Gemini only trades 84 types of crypto tokens, while Coinbase offers 317 and Kraken offers 495. It has also been slower in launching some new products for example, it does not have its own proprietary-level blockchain like Coinbase and Kraken. Matthew Hougan, Chief Investment Officer of crypto asset management company Bitwise, suggests that Gemini's commitment to compliance may have slowed its growth under the stricter regulatory environment before Trump took office. "I suspect the company's pro-regulatory stance may have cost it growth opportunities," Hougan said. "Companies taking more aggressive market strategies are winning market share." The company's filing before the IPO shows that as of the end of June, the company's debt is $1.5 billion nearly equal to its expected market value with a large portion coming from the brothers' family office and other related parties. Gemini stated in recent filing documents that the funds raised through the IPO will be used for "general corporate purposes" and to repay some "third-party debt." Some industry observers question whether this IPO is simply a way for the brothers to recoup some of their investment. "If they were to share some elements of their strategic plans, I would be more optimistic," said Campbell Harvey, a finance professor at Duke University. "Why do they need to raise capital? Is this just a liquidity event for existing owners?" The brothers hold all of the company's Class B shares, which have 10 times the voting rights of the common shares being marketed to IPO investors. According to the revised registration statement, this gives them a total of 97% of the voting rights of Gemini before the IPO. In terms of the upcoming IPO, retail investors may not be concerned about the business details of crypto companies. Following the remarkable increase in shares after Bullish went public in August, the two major shareholders became billionaires although the stock price has since fallen. Gemini will allocate an exceptionally large portion of this IPO about 30% to brokerage platforms like Robinhood that cater to retail investors. At a Bitcoin conference earlier this year, shortly after their visit to the White House, Cameron Winklevoss remarked to his brother that in just a year, things had changed significantly. "In the year before that, you were more likely to think you were going to prison than going to the White House," he quipped.