Gemini has reached a settlement in principle with Genesis, detailing a plan to distribute $1.8 billion to Earn users, with the process starting within two months, pending court decision.
In a recent announcement by Gemini, the crypto exchange outlined its in principle agreement with Genesis, aiming to resolve the Earn program‘s disruption.
Gemini’s Asset Recovery Plan
The settlement involves the restitution of digital assets to the affected users, with the total value now exceeding the original amount of $1.1 billion by $700 million due to asset appreciation since the halting of withdrawals in November 2022.
If the Bankruptcy Court approves the settlement, Earn users should receive about 97% of their assets in kind within the next two months, with the remainder expected to be returned over the next 12 months.
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 thanks the New York Department of Financial Services (DFS) for its role in this settlement, which delivers a coin-for-coin recovery for Earn users,” the company stated in the announcement.
“This means, for example, that if you had lent one bitcoin in the Earn program, you will receive one bitcoin back,” said Gemini.
According to the DFS, the company will pay a $37 million fine for major failures impacting the company’s stability and safety. Additionally, Gemini is set to contribute $40 million towards the Genesis Global Capital bankruptcy, aiming to benefit Earn customers, in coordination with the Bankruptcy Court.
“Gemini failed to conduct due diligence on an unregulated third party, later accused of massive fraud, harming Earn customers who were suddenly unable to access their assets after Genesis Global Capital experienced a financial meltdown,” said Superintendent Adrienne A. Harris.
“Today’s settlement is a win for Earn customers, who have a right to the assets they entrusted to Gemini,” said Harris.
GGC and Failed Earn Program
Launched on Feb. 1, 2021, the Earn program allowed Gemini customers to lend their cryptocurrencies to the unregulated GGC. Customers earned interest, but Gemini failed to properly oversee GGC, leading to a default on nearly $1 billion in loans by November 2022 and GGC’s subsequent bankruptcy.
This lack of diligence and inadequate reserves by Gemini resulted in over 200,000 Earn customers being unable to access their assets, causing both reputational and financial damage to Gemini and its users.
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