Gemini Earn users are set to receive triple the value of assets locked in the lending product following issues with FTX and Genesis.
On Wednesday, cryptocurrency exchange Gemini revealed its intention to reimburse creditors with $2.18 billion worth of cryptocurrency. This in-kind repayment signifies a 232% recovery for Earn users who were previously stranded in bankruptcy.
Gemini’s lending partner, Genesis, a subsidiary of Digital Currency Group (DCG), was impacted by the 2022 crash at FTX. This upheaval resulted in the inability to withdraw over $940 million from the Earn product, affecting more than 230,000 users.
Genesis faced an extended period of bankruptcy due to a public legal conflict, with Gemini’s co-founders Cameron and Tyler Winklevoss accusing Genesis, DCG, and DCG CEO Barry Silbert of defrauding investors. New York authorities filed lawsuits against all three entities, leading the crypto exchange to pay $37 million in fines. Eventually, in February, they agreed to reimburse Earn investors with $1.1 billion.
In its repayment statement, the company stated that its dispute with Genesis was more about “old-fashioned financial fraud compounded by a lack of regulatory clarity” rather than an issue specific to the crypto industry. To demonstrate its good intentions, the exchange set aside $50 million to ensure the recovery of Earn users, marking an unprecedented outcome in bankruptcy proceedings.
Several other struggling firms from the crypto industry’s tumultuous 2022 are also finalizing plans to repay creditors. The FTX estate anticipates returning up to 142% of customer funds and making over two million creditors whole, taking into account the difference in crypto prices since filing for Chapter 11 protection.
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