Crypto exchange Gemini has kicked off the process of reimbursing users of its now-defunct lending program, Earn.
According to an announcement, Gemini’s Earn users were paid $2.18 billion in digital assets on May 29, representing 97% of the assets owed to users and a 232% recovery following an interruption of withdrawals by Genesis, a former Gemini Earn partner.
“This means, for example, if you had lent one Bitcoin in the Earn program, you will receive one Bitcoin back. And it means that you will receive any and all appreciation of your assets since you lent them into the Earn program,” reads the statement on X.
The fund distribution was the result of a settlement reached with Genesis and other creditors in the bankruptcy process. Genesis Global, a crypto lender part of the Digital Currency Group (DCG), filed for bankruptcy in January 2023 after suspending withdrawals amid a liquidity crisis in November 2022. A court recently approved Genesis’ return of $3 billion in cash and cryptocurrency to its creditors.
“This represents an unprecedented recovery among crypto bankruptcies [...] we reached a settlement in principle with Genesis and other creditors [...] which will result in all Earn users receiving 100% of their digital assets back in kind.”
New York Attorney General Letitia James announced on May 20 that her office secured a $2-billion settlement with Genesis to address investor fraud claims. The settlement ordered Genesis to return funds to investors and cease operations in New York. Genesis has been accused of misleading investors, who deposited more than $1.1 billion through the Gemini Earn program.
“Finally, it’s important to note that the Genesis bankruptcy was not a crypto problem. It was old-fashioned financial fraud compounded by a lack of regulatory clarity,” noted Gemini in the statement. Genesis was one of the several crypto firms that filed for bankruptcy following FTX’s dramatic debacle in November 2022.
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