TLDR
- Gemini has announced that users of its Earn lending program will receive $2.18 billion worth of digital assets, representing a 232% increase in U.S. dollar value since Genesis paused withdrawals in 2022.
- The in-kind distribution means that Earn users will receive 100% of their digital assets back, with the value of many assets having increased substantially since late 2022.
- Gemini contributed $50 million to ensure Earn users’ recovery, with 97% of digital assets distributed today and the remaining balance expected within 12 months.
- The relationship between Genesis and Gemini has been the subject of lawsuits and regulatory scrutiny from the SEC and the New York Attorney General.
- Gemini co-founder Tyler Winklevoss called the Genesis bankruptcy “old-fashioned financial fraud” and not a crypto problem.
Gemini, the New York-based crypto platform founded by Cameron and Tyler Winklevoss, has announced that users of its Earn lending program will receive a staggering $2.18 billion worth of digital assets.
This in-kind distribution represents an unprecedented recovery among crypto bankruptcies, with Earn users receiving 100% of their digital assets back.
The value of the returned assets has skyrocketed since Genesis, Gemini’s Earn partner, halted withdrawals in late 2022.
Good guys https://t.co/YXqXJiwE78
— Blockonomi (@blockonomi) May 29, 2024
At that time, the collective crypto assets of approximately 232,000 Earn users were valued at around $940 million.
However, with the resurgence of the crypto market, the value of these assets has increased by a remarkable 232% in U.S. dollar terms.
For instance, users who lent one Bitcoin through the Earn program will receive one Bitcoin back, and Bitcoin’s value has nearly quadrupled since November 2022.
Gemini’s payout for Earn users stands in stark contrast to the resolutions of some other crypto bankruptcies.
For example, the bankrupt crypto exchange FTX anticipates returning 100% of customers’ funds when measured in U.S. dollars, but this figure reflects the depressed crypto prices at the time of the firm’s bankruptcy filing.
To ensure a full recovery for Earn users, Gemini contributed $50 million towards the effort. The company has already distributed 97% of the digital assets owed to Earn users, with the remaining balance expected to be received by customers over the next 12 months.
The relationship between Gemini and Genesis has been fraught with legal disputes and regulatory scrutiny.
In October 2023, Gemini sued Genesis over $1.6 billion worth of shares in Grayscale’s Bitcoin Trust (GBTC), arguing that the funds had been pledged to them.
Despite Genesis’ failure to deliver half of the shares as part of a security agreement, Gemini used some of that capital to satisfy Earn users’ claims.
The U.S. Securities and Exchange Commission (SEC) and the New York Attorney General have taken interest in the Gemini Earn program. In March, Genesis paid $21 million to settle SEC charges accusing the lender of engaging in the sale of unregistered securities through the Earn program.
Gemini co-founder Tyler Winklevoss, in a statement, emphasized that the Genesis bankruptcy was not a crypto problem but rather a case of
“old-fashioned financial fraud compounded by a lack of regulatory clarity.”
