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The person who tells Nick Carraway that Jay Gatsby is related to Kaiser Wilhelm is Catherine. She is Myrtle Wilson's sister.
You can find this passage towards the end of Chapter 2. Nick has gone with Tom Buchanan and Myrtle to the city (this is when Nick first finds out that Tom has a mistress). They are at a party in the apartment and Nick is making small talk with Catherine. He mentions that he lives in West Egg, which causes her to mention Gatsby. She tells him she's heard Gatsby is either a cousin or nephew of the former German ruler.
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