New York-based cryptocurrency exchange Gemini announced late Wednesday that the parties involved in the bankruptcy case of crypto lending company Genesis have agreed to return $1.1 billion in digital assets to users of the platform’s Earn program.
“We have finally reached a settlement in principle with Genesis and other creditors in the Genesis Bankruptcy that will, if approved by the Bankruptcy Court, result in all Earn users receiving 100% of their digital assets back in kind,” the company wrote.
Earn Update: Today, we are pleased to announce that we have finally reached a settlement in principle with Genesis and other creditors in the Genesis Bankruptcy that will, if approved by the Bankruptcy Court, result in all Earn users receiving 100% of their digital assets back in…
— GeminiTrustCo (@GeminiTrustCo) February 28, 2024
Founded in 2014 by Cameron and Tyler Winklevoss, Gemini—also known as the Gemini Trust Company—offers not only a cryptocurrency exchange but also broader financial services, including cryptocurrency staking, crypto wallets, cold storage, credit card services, and the Nifty Gateway NFT marketplace.
In October, the office of the New York Attorney General (NYAG) filed a lawsuit in the U.S. Bankruptcy Court Southern District of New York against Gemini, digital asset lender Genesis, and Digital Currency Group for defrauding investors.
“These cryptocurrency companies lied to investors and tried to hide more than a billion dollars in losses, and it was middle-class investors who suffered as a result,” New York Attorney General Letitia James said at the time. “Hardworking New Yorkers and investors around the country lost more than a billion dollars because they were fed blatant lies that their money would be safe and grow if they invested it in Gemini Earn.”
After the collapse of cryptocurrency exchange FTX in 2022, a contagion swept the cryptocurrency market. One of the companies caught up in the blood bath was Genesis Trading. In November 2022, Genesis suspended its lending services, warning customers of a potential bankruptcy.
The following week, Gemini sued Genesis for control of $1.6 billion in Grayscale Bitcoin Trust shares.
According to Gemini, participants in the Earn program will receive the same amount of Bitcoin that they originally lent, plus any increase in value realized since.
“If approved, we will be returning over $1.8 billion in value (at today’s prices),” Gemini said. “$700 million more than when Genesis halted withdrawals on November 16, 2022.”
As a part of the settlement, Gemini said the exchange will also contribute $40 million toward recovering user funds.
Once approved, Gemini continued, Earn users can expect to receive approximately 97% of their assets in kind within about two months and the remaining asset balance within the next 12 months.
“The settlement, in principle, is subject to definitive documentation,” Gemini warned. “The required Bankruptcy Court process could take as long as two months to complete, and we will keep Earn users informed along the way.”
Gemini did not immediately respond to Decrypt’s request for comment.
Saying that it recognizes the hardship customers have experienced through the settlement process, the company expressed appreciation for its customers’ patience and support.
“As responsible stewards of the crypto ecosystem, we know that our customers value the ability to hold their digital assets through the ups and downs of crypto market cycles,” Gemini wrote. “Being able to return assets on a coin-for-coin basis to our customers was critical for us.”
Edited by Ryan Ozawa.
