Gemini, Kraken, Bullish… last exchange to go public is a rotten egg!

U.S.-based digital asset exchanges are pursuing initial public offerings (IPOs) despite the threat of extra regulatory scrutiny that comes with public listings.

• Winklevii mulling Gemini IPO this year?
• Kraken talking IPO in 2026?
• Bitgo, Bullish, Circle, Ripple next?
• Robinhood finds public scrutiny not all fun

Late last week, Bloomberg reported that the Gemini exchange run by Cameron and Tyler Winklevoss had “confidentially” filed for an IPO, citing sources familiar with the matter. Last month, Bloomberg reported that Gemini was discussing the possibility of an IPO with advisers but that no decision had been made.

The IPO, which presumably would occur on the tech-friendly Nasdaq stock exchange, is reportedly being handled by Goldman Sachs Group (NASDAQ: GS) and Citigroup (NASDAQ: C). None of the parties have confirmed the article’s claims so far, but assuming the reports are true and there are no hiccups, Gemini’s IPO could occur before the year is through.

The Winklevii hive-mind may have been made up after their company rid itself of some long-running U.S. regulatory baggage. On February 26, Gemini announced that the Securities and Exchange Commission (SEC) had concluded its investigation into Gemini and didn’t “intend to recommend an enforcement action.” The SEC has paused or halted multiple probes/lawsuits against crypto operators since Donald Trump was sworn in as U.S. President, and the SEC has undergone significant leadership changes.

The Winklevii recognize that their fortunes might have unfolded very differently had Trump not prevailed at the ballot box last November. Both brothers were in attendance at last Friday’s White House ‘crypto summit’ and chose to thank Trump personally for pulling their asses out of the fire.

Following remarks by the president and his Cabinet members, Trump’s AI and Crypto Czar David Sacks asked Cameron to repeat something he’d said before the summit got underway. Sacks quoted Cameron saying, “A year ago, you thought it would be more likely that you’d end up in jail than at the White House.” Sacks quickly added that the twins “didn’t do anything wrong, but that was the environment a year ago” under the previous administration.

Cameron credited the quote to his brother Tyler, but agreed that the twins “never thought we’d get attacked the way we did in our backyard after trying to do the right thing for so many years.” Cameron praised Trump and said the brothers “look forward to working together” with the president to advance the cause of crypto.

Gotta say it was a shrewd move for the twins to paint themselves as the victims of unfair persecution while insisting that they’d done nothing wrong, given that these are some of Trump’s favorite talking points about himself.

But for the record, the claim that Gemini didn’t do anything wrong would be challenged by many a Gemini customer who lost access to their digital assets for over a year due to the brothers’ willingness to lend those tokens to companies that put even less effort into compliance and due diligence than Gemini did.

And as for Gemini trying so hard to do the right thing, that must have been why Gemini agreed last June to pay $50 million to resolve a New York Attorney General fraud complaint stemming from the aforementioned fraudulent lending practices.

Or why the Commodity Futures Trading Commission (CFTC) reached a $5 million settlement with Gemini this January regarding the exchange “making false or misleading statements of material facts” regarding a BTC-based exchange-traded product (ETP).

Release the Kraken shares!

Bloomberg appears to have all the IPO scoops, as it reported last week that the Kraken exchange would go public in the first quarter of 2026. Kraken’s parent company, Payward Inc. didn’t confirm Bloomberg’s reporting, saying only that the company would “pursue public markets as it makes sense for our clients, our partners and shareholders.”

Like Gemini, Kraken was recently granted a regulatory reprieve from the SEC, ending a 16-month saga that began when the SEC accused the company of operating an unregistered securities exchange, broker, dealer, and clearing agency.

Once it goes public, Kraken will be required to issue quarterly financial reports, much like its rival Coinbase (NASDAQ: COIN). To prepare for this eventuality, Kraken recently released its 2024 ‘financial highlights,’ offering a threadbare version of bending over and dropping trou so the rest of us can stick our fingers in and root around. (Sorry for the visual.)

Kraken says its 2024 revenue hit $1.5 billion, more than double 2023’s $671 million and nearly 60% better than the $931 million figure from 2022, the last year before ‘crypto winter’ set in.

Adjusted earnings—the kind that fabled investor Charlie Munger used to call ‘bullshit earnings’—totaled $380 million, but we’ll have to wait until after the IPO to learn how much of that scratch actually makes it to Kraken’s bottom line.

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Anybody else?

California-based digital asset custodian BitGo is also said to be having talks with potential advisers regarding an IPO. In August 2023, BitGo raised $100 million from undisclosed investors, putting its valuation at $1.75 billion.

Circle, the issuer of the USDC stablecoin, filed its preliminary IPO paperwork over a year ago but has yet to indicate when it might pull the trigger on this plan. Circle previously flirted with going public via a special purpose acquisition company (SPAC) but scrapped these plans in December 2022 as the crypto market began collapsing in on itself.

USDC’s market cap hit an all-time high of $58.3 billion on March 10 but slipped back below $58 billion as part of Monday’s broader market sell-off. Regardless, it’s still above its previous cap high of $56.1 billion set back in June 2022, so the time to strike may be now (before the world realizes that ‘crypto’ remains the same old fraudulent farce).

Ripple Labs, the issuer of the XRP token, previously pledged to take itself public once its long-running fight with the SEC was over. Oddly enough, Ripple is among the few digital asset firms that have yet to reach some kind of accommodation with the regulator.

In January 2024, Ripple CEO Brad Garlinghouse told CNBC that his company had looked beyond ‘Murica for a more welcoming regulatory climate in which to go public but had nothing concrete in the works. Garlinghouse said the company would “evaluate again” the possibilities of a homegrown IPO once there were “new regulators sitting at the United States SEC.” Ahem.

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Robinhood’s merry band of inadequate watchmen

Outside of allowing founders and senior execs to cash out big, the benefits of going public include… hang on, give us a minute… um, the constant need to generate higher profits than you did three months ago, or investors will dump your stock? The pressure to make ill-advised layoffs and cancel expansion plans because investing in your company’s future might negatively impact this quarter’s results? Getting to ring that stupid bell the morning you list? Sweet.

And that’s not to mention the extra regulatory scrutiny that comes from being publicly traded. Consider Robinhood (NASDAQ: HOOD), which just agreed to pay a total of $29.75 million to atone for its compliance shortcomings, including failing to respond to red flags of potential misconduct.

The penalty was imposed by the Financial Industry Regulatory Authority (FINRA), a private regulator tasked with ensuring brokerage firms and exchanges don’t stray so far off the straight & narrow path that they embarrass the entire U.S. financial sector.

FINRA’s investigation of Robinhood Financial found that the company “provided customers with inaccurate or incomplete disclosures regarding its practice of ‘collaring’ market orders.” Customers whose orders were cancelled later re-entered these orders but “received executions at an inferior price.” Robinhood Financial agreed to pay these customers restitution totaling $3.75 million.

Robinhood Financial and Robinhood Securities were collectively fined $26 million for various regulatory shortcomings. For instance, neither unit established “reasonable” anti-money laundering (AML) programs, leading to undetected/unreported “manipulative trading, suspicious money movements and instances where customers’ accounts were taken over by third-party hackers.”

Robinhood Financial fell similarly short of even knowing who its customers were, resulting in the brokerage “opening thousands of accounts when it had not reasonably verified the customer’s identity.”

Robinhood Financial hired social media influencers to promote the company online but failed to adequately supervise these influencers’ output, resulting in “statements that were promissory or not fair and balanced, and thus misleading to investors.” (That’s not a new phenomenon.)

There were other shortcomings, some of which were self-reported to FINRA. Both Robinhood units agreed to the penalties without admitting or denying the charges, and also decided to certify that the issues flagged by FINRA were remediated.

FINRA’s head of enforcement, Bill St. Louis, said the penalties imposed on Robinhood should remind all FINRA members “that compliance with core regulatory obligations remains critical to safeguarding and serving all investors.”

The FINRA spanking came not long after Robinhood’s non-crypto units reached a $45 million settlement with the SEC. More recently, Robinhood Crypto announced the SEC had chosen to look the other way regarding its alleged illegality. That’s a major bonus, as the company’s Q4 crypto revenue rose 7x year-on-year, making it the major driver of the company’s overall revenue, which doubled its Q4-2023 total.

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