Winklevoss-Owned Gemini Returns $2.18B to Users After Genesis Bankruptcy

Gemini is distributing $2.18 billion in digital assets to 232,000 Gemini Earn users following Genesis's bankruptcy.

The figure represents a 242% return on assets locked up since January 2023. Those who loaned 1 Bitcoin (BTC) to Genesis will receive 1 BTC back, benefiting from BTC's recent price surge.

Gemini customers will receive 97% of the repayment immediately and the remainder within one year, the company said.

"We are thrilled to have been able to achieve this recovery for our customers," Gemini co-founder Cameron Winklevoss said in a statement. "We recognize the hardship caused by this lengthy process and appreciate our customers' continued support and patience throughout."

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 last 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.

In November 2022, Genesis Global sued Gemini Trust to recover funds withdrawn by customers in the post-FTX bank run that led to Genesis's bankruptcy.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.

The crypto lender 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.

When Genesis froze customer accounts in November 2022, the total value of Gemini Earn assets was $940 million.

Genesis has since been able to return customers' crypto instead of liquidating a limited pool of assets and repaying them in cash.

Earlier this month, Genesis Global was approved to return $3 billion in cash and crypto to its customers.

"We didn’t cap their claims at the petition date value," Genesis attorney Sean O'Neal said on Wednesday. "Now we need to focus on making distributions to Genesis's remaining creditors."