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Gemini has agreed to return $1.1 billion to users of its Earn program as part of its bankruptcy procedure.
“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,” Gemini announced.
Earn program customers will receive the same amount of Bitcoin they had lent originally as well as any increase in value.
“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.”
Participants can expect to receive around 97% of their assets within two months of approval and the remaining balance within the next 12 months. $40 million will also be contributed by Gemini to recover user funds.
“The settlement, in principle, is subject to definitive documentation,” Gemini added. “The required Bankruptcy Court process could take as long as two months to complete, and we will keep Earn users informed along the way.”
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
Gemini, which was founded by Cameron and Tyler Winklevoss in 2014, had a lawsuit filed against it by the New York Attorney General (NYAG) for defrauding investors in October.
“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.
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“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.”
In November 2022, Genesis Global sued Gemini Trust to recover funds withdrawn by customers in the post-FTX bank run that led to Genesis's bankruptcy.
Genesis claimed up to 230,000 users under the "Earn investing program" withdrew $689 million from its platform in 90 days before it filed for bankruptcy.
Genesis borrowed assets from Earn customers and re-invested the funds to pay interest to customers. Gemini served as the custodian that processed deposits and withdrawals, earning a cut from payments by Genesis to Earn users.
Earlier this month, Genesis received US court approval to sell $1.6 billion in Grayscale cryptocurrency trust shares to repay creditors.
US Bankruptcy Judge Sean Lane approved the request, allowing the firm to sell shares of Grayscale Bitcoin Trust, Grayscale Ethereum Trust, and Grayscale Ethereum Classic Trust.
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