The settlement with Genesis means users will get 100% of their funds returned
Gemini co-founder Tyler Winklevoss calls Genesis “financial fraud” in a press release.
Gemini announced Wednesday that its Gemini Earn users have received all their digital assets back in-kind.
This means, for instance, that if a customer lent one bitcoin to the Earn program, they will receive one bitcoin back, the company said in a release.
Gemini said Earn users have received $2.18 billion of their digital assets back in-kind. This represents a 232% recovery from when Genesis, Gemini’s Earn partner, halted withdrawals, causing Gemini to pause withdrawals on its Earn program.
Since then, bitcoin is up over 200% according to CoinDesk Indices data.
Gemini first announced that it planned to return 100% of customers’ assets back in February as part of the conclusion of Genesis’ bankruptcy.
“From the start, Gemini’s goal was to obtain the return of 100% of its users’ digital assets from Genesis, and Gemini was dedicated to a coin-for-coin recovery,” Anson Frelinghuysen, a partner at Hughes Hubbard & Reed LLP and Gemini’s lead bankruptcy counsel, said in a statement to CoinDesk.
Gemini contributed $50 million to ensure Earn users’ recovery, with 97% of digital assets distributed today and the remaining balance expected within 12 months, it said in a release.
“Throughout the restructuring process, Gemini steadfastly advocated for its users and, as a result of these efforts, was able to obtain a completely unprecedented 232% overall recovery for Gemini Earn users,” Frelinghuysen continued.
The relationship between Genesis and Gemini has been the subject of a lawsuit between the two companies, and interest from both the U.S. Securities and Exchange Commission as well as the New York Attorney General.
In October 2023, Gemini sued Genesis Global Capital for $1.6 billion over 60 million Grayscale Bitcoin Trust (GBTC) shares pledged as collateral.
The lawsuit claims that controlling these shares would satisfy the claims of Gemini Earn customers affected by Genesis freezing withdrawals in 2022. Concurrently, Genesis has sued Gemini to recover $689 million, alleging preferential transfers that unfairly benefited Gemini at the expense of other creditors.
Later, in March 2024, Genesis Global Capital agreed to pay a $21 million civil penalty to settle SEC charges related to the Gemini Earn program.
As part of Genesis’ bankruptcy, a court approved a $2 billion settlement by the New York Attorney General to establish a victims’ fund for New Yorkers who invested over $1.1 billion through the Gemini Earn program and barred Genesis from operating in the state.
“It’s important to note that the Genesis bankruptcy was not a crypto problem,” said Tyler Winklevoss, Co-Founder and CEO of Gemini, in a statement. “It was old-fashioned financial fraud compounded by a lack of regulatory clarity.”
CORRECTION (May 29, 2024, 15:05 UTC): Corrects second bullet.
