On May 29, the crypto exchange Gemini announced that its Earn users would recover $2.18 billion of their digital assets. This figure represents 97% of the assets owed to Earn users and a 232% recovery from when Genesis halted withdrawals.
Moreover, Gemini stated that it would calculate the asset recovery using notional dollar value as of May 28, 2024. This recovery is noteworthy, particularly in the context of crypto company bankruptcies.
Gemini Users Reclaim Digital Assets Despite Genesis Bankruptcy
The official statement from Gemini highlighted that Genesis’s bankruptcy impacted around 232,000 users of the Earn program, leaving them unable to access their digital assets. Initially, these assets were valued at approximately $940 million.
Read more: Who Are Cameron and Tyler Winklevoss? A Profile on the Twins
“This […] follows Gemini’s previous announcement that it reached a settlement in principle with Genesis and other creditors in the Genesis Bankruptcy, which will result in all Earn users receiving 100% of their digital assets back in kind. […] For example, if a customer lent one Bitcoin in the Earn program, they will receive one Bitcoin back. This ensures that customers will benefit from any and all appreciation of their digital assets since they lent them into the Earn program,” the announcement reads.
Despite Genesis failing to deliver over half of the collateral promised in a security agreement, Gemini leveraged the delivered collateral to facilitate this recovery. The company also included a $50 million contribution in its recovery efforts to aid the affected Earn users. The initial distributions cover 97% of the assets, with the remaining balance expected within the next 12 months.
Regarding this recovery, Cameron Winklevoss, Co-Founder and President of Gemini, expressed gratitude for the customers’ patience.
“We are thrilled that we have been able to achieve this recovery for our customers. We recognize the hardship caused by this lengthy process and appreciate our customers’ continued support and patience throughout,” he said.
Meanwhile, Tyler Winklevoss, Co-Founder and CEO of Gemini, emphasized that the Genesis bankruptcy stemmed from financial fraud and regulatory issues. He thinks it is not a problem inherent to the crypto sector.
“It was old-fashioned financial fraud compounded by a lack of regulatory clarity. 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,” he added.
Many key figures in the crypto industry expressed their enthusiasm at this revelation. Ryan Selkis, CEO and founder of crypto research platform Messari, echoed Winklevoss’s statement that it “was always a Genesis or DCG issue.”
“Good to see Gemini earn customers made whole under what looked like an impossible set of circumstances,” Selkis wrote.
Read more: Digital Currency Group Downfall: What Went Wrong With the VC Giant
This recovery follows a settlement with the New York Department of Financial Services (NYDFS) in February. Under the settlement, Gemini agreed to reimburse approximately $1.1 billion to Earn customers. Superintendent Adrienne Harris highlighted Gemini’s failure to conduct thorough due diligence on Genesis before their partnership, contributing to the program’s downfall.
Launched in 2021, Gemini’s Earn program allowed customers to loan their crypto to Genesis Global Capital and earn over 7% annual percentage yield (APY). However, the collapse of the crypto exchange FTX in November 2022 impacted Genesis. This incident led to its bankruptcy and freezing of assets belonging to Earn customers.
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
