Saha Swatilakha
Cryptocurrency exchange Gemini announced on Wednesday the distribution of $2.18 billion worth of digital assets to users of its Earn program. This comes after an 18-month suspension of withdrawals, following the collapse of its lending partner, Genesis Global Capital, amid the fallout from the FTX crisis.
The repayment marks a significant recovery for users who had their assets locked in the Earn program, with the reimbursement representing a 232% recovery rate. Tyler and Cameron Winklevoss, co-founders of Gemini, said this unprecedented outcome is due to a series of settlements and contributions aimed at making defrauded investors whole again.
“Today, Earn users received $2.18 billion of their digital assets in kind. These initial distributions represent 97% of digital assets owed to Earn users, $1 billion more than when Genesis halted withdrawals,” Genesis stated. The saga began in November 2022, when Genesis Global Capital, a subsidiary of Digital Currency Group (DCG), paused new loan originations and redemptions, forcing Gemini to halt withdrawals from its Earn program. This move affected over 230,000 users and locked up more than $940 million in cryptocurrency.
“The Genesis bankruptcy was not a crypto problem. It was old-fashioned financial fraud compounded by a lack of regulatory clarity,” Gemini stated. “In order to ensure this successful resolution, Gemini has also contributed $50 million to the Earn users’ recovery.” Customers will receive the initial distributions, representing approximately 97% of their digital assets owed by Genesis as of the suspension date, in their Gemini accounts. The remaining balances are expected to be distributed within the next 12 months.
“This means, for example, that if you had lent one bitcoin in the Earn program, you will receive one bitcoin back. And it means that you will receive any and all appreciation of your assets since you lent them into the Earn program,” Gemini assured its users.
The settlement follows a $2 billion agreement announced by New York Attorney General Letitia James, aimed at repaying defrauded investors. This resolution is being hailed as an unprecedented recovery not just within the crypto industry, but in the broader context of bankruptcy resolutions. “To that end, we will continue to fight for clear rules and guidance for our industry that foster both innovation and consumer protection. And we will win this fight. The future is bright,” Cameron and Tyler Winklevoss concluded.
