Crypto company Gemini, named for the Winklevoss twins, has a fraud problem

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Whoops! Crypto company Gemini is having some trouble with fraud

, citing two anonymous sources. They had to pause the card rollout — and the fraud cost Gemini “millions of dollars,” according to three anonymous sources.and very funny problem in the banking industry. The ideal amount of fraud in finance isn’t zero — the classic example is the husband whose porn payment is discovered by his spouse on their shared credit card statement and who calls the bank to say, lying, that it’s a fraudulent charge in order to avoid a nasty marital fight.

With something like cryptocurrency, though, a lot of people who are using it are using it for a reason: either they can’t access the regular banking industry or they don’t want to, for instance, because they are trying to get the ransom payment on the hack they did on some business. I mean, thepeople.

Anyway, this isn’t the only fraud problem Gemini is having. You know how a lot of financial services, for instance, PayPal, prefer you to give them your bank account number rather than your credit card number? That’s because of the Automated Clearing House, which is the system that your job might use to direct deposit your paycheck.Because it’s cheap, a lot of fintechs, including crypto providers, prefer it. The only problem is if the account information is stolen — or, crucially,.

This scenario made Gemini a target for fraudsters initiating ACH transfers using stolen bank account information, two people familiar with the matter said, because they could quickly exploit this loophole to take out crypto. That left the exchange with less crypto to seize if the bank transfer was eventually disputed by the real bank account owner and the exchange had to pay the transfer back, and therefore even bigger losses if crypto prices fell again.

There’s a part of me that wonders if Gemini would have avoided all of this if someone in a position of power had read, like, Ashlee Vance’s Elon Musk biography, or Max Chafkin’s. PayPal set out to revolutionize the financial industry pretty recently, after all. I’m assuming there were peopleGemini who had an inkling about how this would go, and they probably ripped out all their bountiful hair.

 

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