Gemini have allegedly shut down two reputable over-the-counter (OTC) trading desks’ accounts, after they attempted to cash out a large sums of the Gemini Dollar stablecoin (GUSD) for fiat dollars, according to a CoinDesk report.
Two OTC desks – one US-based and one Latin America-based – speaking anonymously to CoinDesk, described Gemini’s =reaction to large redemptions of its tokens in exchange for USD.
According to CoinDesk, one desk’s access was suspended after signalling their intention to withdraw a large sum of GUSD. The desk was first “warned by Gemini staff that redeeming millions of dollars would harm the stablecoin,” following which the desk’s account was summarily closed.
Another incident anonymously reported to CoinDesk was largely identical – the desk’s account was summarily closed following a large withdrawal. Yet another OTC trader privately confided that he was reluctant to attempt a GUSD redemption out of fear of being shut down, suggesting a general industry awareness of Gemini’s stance.
Juking the Stats
Such large redemptions may fly in the face of Gemini’s ambition – shared with other new stablecoin entrants – to gain market share. The spirit of this competitive ambition among stablecoin issuers can be seen in the recent quid pro quo trend of offering discount sales of new stablecoins in return for a commitment not to quickly redeem the tokens for USD – a so-called “lock-up period.”
Gemini told CoinDesk by way of explanation that “some potential customers will be unable or unwilling to pass our robust compliance program […] [t]his is a feature, not a bug.”