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Gemini is fighting to reverse its market share decline amid regulatory and financial challenges.

The exchange’s troubles became apparent in November 2022 when its Earn Program partner, the now-bankrupt Genesis, failed to pay $765 million owed. As a result, on Jan. 10, Gemini announced discontinuing the Program.

Soon after, the U.S. Securities and Exchange Commission (SEC) slapped both firms with a lawsuit alleging the Earn Program constituted the sale of unregistered securities. Last week, Gemini and Genesis filed to dismiss the SEC’s case because the Program is not a security offering.

Last month, the Winklevoss twins lent Gemini $100 million to keep the company afloat – suggesting the broader market downturn is weighing heavily on the exchange’s bottom line.

More recently, an unnamed source told Bloomberg that JPMorgan sought to end its partnership with Gemini due to unprofitability. However, Charles Harder, Gemini Trust Lawyer, denied the report, saying, “Gemini’s relationship with JPMorgan remains intact.”

Gemini’s dwindling market share

In conjunction with the exchange’s challenges, analysis from CCData, reported by Bloomberg, showed Gemini’s cumulative trading volume from January to April 2023 had declined by almost 50% compared to September to December 2022.

The company’s monthly trading volume hit a record low in February, accounting for only 0.07% of the global spot trading volume. However, this had increased to 0.12%, or $747 million, in April. Despite the improvement, Gemini’s April trading volume was nearly half of what it was a year ago.

Meanwhile, Coinbase, Kraken, and Binance had all increased their market share in April from the previous year – with Binance accounting for 46% of the global market versus 31% a year ago.

Future outlook

Given the hostile U.S. landscape, the exchange has been busy expanding overseas. Earlier this month, the business launched its derivatives platform — Gemini Foundation —  in 30 countries. Last week, the twins announced that Dublin, Ireland, will become the exchange’s new European base.

But Gemini continues to face regulatory hurdles abroad as well. Last week, the Securities and Exchange Commission in the Philippines warned that Gemini’s newly launched derivatives platform is operating without approval.

Campbell Harvey, a Finance Professor at Duke University, commented that Gemini could benefit from being acquired by a larger competitor.

Harvey said that with the “strong brand” of the Winklevoss twins, a merger with Coinbase or Kraken could be possibly imagined. However, the exchange’s regulatory troubles could hinder any such deal.

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