Gemini to repay Earn customers $2.18 billion
Gemini Earn users will receive triple the value of assets locked in the lending product after debacles with FTX and Genesis.
On Wednesday, crypto exchange Gemini announced plans to repay creditors $2.18 billion worth of cryptocurrency. The in-kind reimbursement represents a 232% recovery for Earn users previously left in bankruptcy limbo.
Gemini’s lending partner, Genesis, a Digital Currency Group’s (DCG) subsidiary, was caught in FTX’s 2022 crash. The turbulence effectively blocked withdrawals for over $940 million domiciled in the Earn product used by more than 230,000 users.
Genesis entered a protracted bankruptcy due to a public legal dispute, as Gemini’s co-founders Cameron and Tyler Winklevoss accused Genesis, DCG, and DCG CEO Barry Silbert of defrauding investors. New York authorities sued all three firms, and the crypto exchange eventually paid $37 million in fines while agreeing to recover $1.1 billion for Earn investors in February.
In the repayment statement, the firm said its issue with Genesis “was old-fashioned financial fraud compounded by a lack of regulatory clarity”, rather than a crypto problem. As a show of good faith, the exchange allocated $50 million to ensure Earn users’ recovery in an unprecedented bankruptcy outcome.
Several other beleaguered firms from crypto’s 2022 black swan year are also finalizing creditor repayment plans. The FTX estate expects to return up to 142% of customer funds and make over two million creditors whole, accounting for a difference in crypto prices since filing for Chapter 11 protection.
