The Winklevoss War on Sacramento

Tyler Winklevoss, who runs cryptocurrency exchange Gemini Space Station, Inc. (GEMI) with his twin brother Cameron, went after California Governor Gavin Newsom this week over a law that lets the state take control of unclaimed crypto. Winklevoss didn't hold back, calling California a "failed state" that wants to "steal" Bitcoin (CRYPTO: BTC) from people who've held it for long periods.

The crypto mogul framed the move as an attempt to feed the state's "money pit grift machine." That's quite the accusation, especially coming from someone whose business is headquartered in New York City, not California. Both Winklevoss brothers operate their exchange and venture capital firm, Winklevoss Capital Management, out of Manhattan.

Newsom's office didn't immediately respond to requests for comment on the allegations.

What the Law Actually Does

Here's where things get interesting. The bill, which Newsom signed into law last year, treats cryptocurrency as "intangible property" that becomes state property if the holder doesn't show any "act of ownership interest" within three years. Those acts are pretty straightforward: making a transaction like buying, selling, depositing or withdrawing, or even just logging into your account electronically.

So is this really theft? Not according to some experts. Maaria Bajwa, an angel investor from Los Angeles, argues the law functions as custodial escheat rather than forfeiture. That's an important distinction. Escheat laws have existed for centuries to handle abandoned property, and they're designed to protect assets rather than confiscate them.

The California law actually includes several safeguards. Custodians must notify owners 6-12 months before transferring anything to the state. The state can liquidate unclaimed crypto into fiat currency after 18-20 months if nobody steps forward. But here's the kicker: anyone who makes a "valid claim" for their assets can get them back, or get the proceeds if the state already sold them.

Dennis Porter, co-founder of Bitcoin advocacy group Satoshi Action Fund, also pushed back against the "forfeiture" characterization, calling it inaccurate.

Gemini's Rocky Road

This controversy comes at a rough time for Winklevoss's company. Gemini shares closed down 6.62% at $11.00 during Wednesday's regular session, though they ticked up 0.91% in after-hours trading. The real pain is in the yearly numbers: the stock has crashed over 65% in the past year.

The stock's price trends aren't looking great either, showing weakness across short, medium and long-term timeframes. That puts Gemini in a tough spot compared to competitors like Coinbase Global Inc. (COIN) and other cryptocurrency-linked stocks.