GEMI

Business Context and Reporting Period

Company: Gemini Space Station, Inc. (GEMI)
Filing Type: Form 10-Q (Unaudited)
Period Ended: June 30, 2026
Business Overview: A regulated cryptocurrency platform offering exchange, custody, staking, credit card, and prediction market services. The company is an Emerging Growth Company and a non-accelerated filer. It operates as a holding company controlling Gemini Space Station, LLC.

Key Financial Metrics

Note: Debt figures include Related party loans ($258,765), Third party loans ($75,016), and Funding debt ($147,382).

Material Changes vs. Prior Period

• Revenue Growth: Total revenue increased 37% year-over-year for the six months ended June 30, 2026 ($95.7M vs. $68.6M). This was driven primarily by a 258% increase in Credit Card revenue ($30.9M vs. $8.6M) and the launch of Prediction Markets revenue ($1.0M). Exchange revenue declined 32% due to lower retail trading volumes.
• Transaction Losses: Transaction losses surged to $31.2M for the six months ended June 30, 2026, compared to $7.7M in the prior year. This 307% increase was driven by a $20.6M provision for expected credit losses on credit card receivables, including a $4.1M discrete fraud reserve.
• Stock-Based Compensation: Expenses rose significantly to $44.5M (six months 2026) from $3.2M (six months 2025), largely due to equity awards issued in connection with the September 2025 IPO.
• Crypto Asset Valuation: The company recorded a net loss of $161.7M on realized and unrealized gains/losses on crypto assets and receivables for the six months ended June 30, 2026, compared to a gain of $37.9M in the prior year period.
• Restructuring: The company incurred $7.9M in restructuring charges during the first half of 2026 related to the wind-down of operations in the UK, EU, and Australia, including severance and lease termination costs.

Guidance, Outlook, and Risks

• Outlook: Management expects existing cash, available borrowing capacity, and proceeds from a recent $100M private placement (paid in Bitcoin) to be sufficient for operations for at least the next 12 months. The company is focusing on cost optimization and the expansion of the credit card and prediction markets products.
• Private Placement: On May 14, 2026, the company issued 7.1M shares of Class A common stock for $100M in Bitcoin. As of June 30, 2026, it held 988 Bitcoin from this transaction valued at $57.9M.
• Legal & Regulatory Risks:
  • NY Attorney General: A petition was filed in April 2026 alleging Gemini Titan operates an unlicensed gambling business via Gemini Predictions.
  • Securities Class Action: A complaint filed in March 2026 alleges false/misleading statements in the IPO registration statement.
  • CFTC Litigation: A joint motion was filed in May 2026 to vacate a 2025 consent order regarding false statements to CFTC staff.
• Internal Controls: The company disclosed that disclosure controls and procedures were not effective due to previously identified material weaknesses in internal control over financial reporting, specifically regarding the financial close process, risk assessment, and digital asset reconciliations.

Investor Verification Checklist

• Credit Card Fraud Exposure: Verify the sufficiency of the $24.4M allowance for transaction losses given the identified fraud cohort and the $4.1M discrete reserve.
• Related Party Dependencies: Assess the impact of $258.8M in related party loans (primarily from Winklevoss Capital Fund) and the terms of these crypto-denominated borrowings.
• Regulatory Capital: Confirm compliance with NYDFS tangible net worth requirements, noting that digital assets are currently categorized as intangible assets for GAAP purposes.
• Internal Control Remediation: Review the progress of remediation efforts for the material weaknesses in internal controls over financial reporting.
• Litigation Outcomes: Monitor the status of the NY Attorney General's petition regarding Gemini Predictions and the securities class action lawsuit.