Bankrupt cryptocurrency lender Genesis and cryptocurrency exchange Gemini successfully returned more than $2 billion in cryptocurrency to 232,000 retail customers through their jointly managed Gemini Earn program. The redemption will allow customers to receive a 242% return on assets locked up after January 2023, Gemini announced Wednesday.
Unlike other cryptocurrency companies that went bankrupt after the 2022 market crash, Genesis returned customers’ cryptocurrency assets instead of liquidating them for cash payouts.
Customers who lent one Bitcoin to Genesis will receive one Bitcoin back, benefiting from a significant increase in the price of the coin after Genesis declared bankruptcy. The value of Bitcoin has more than tripled since January 2023, rising to more than $67,000.
“We are thrilled to have been able to achieve this recovery for our customers,” said Cameron Winklevoss, Gemini co-founder. “We recognize the challenges this lengthy process presents and thank our customers for their continued support and patience.”
Gemini customers will receive approximately 97% of their repayments immediately, with the remainder distributed within 12 months, the company said.
Genesis previously estimated that its clients, including large investors who did not participate in the Earn program, would receive a 77% recovery in the event of bankruptcy. Gemini customers benefited from a $50 million settlement contributed by Gemini and a settlement that allowed Genesis to sell shares of the Grayscale Bitcoin and Ethereum trust.
Gemini Earn program participants loaned their cryptocurrency to Genesis and earned interest on the loaned assets. The total value of Gemini Earn assets was $940 million when Genesis froze customer accounts in November 2022.
New York Attorney General Letitia James claimed the Gemini Earn program was a “scam” that misled investors. She sued Genesis, Gemini, and Genesis’ parent company, Digital Current Group (DCG), over the program.
Last February, James reached a settlement with Genesis that required it to repay Earn customers before other creditors, including the state of New York and DCG.
DCG insisted that Genesis customers be repaid based on the value of their cryptocurrency assets in January 2023. According to this claim, which was rejected by a judge on May 17, DCG could have taken the ‘excess’ value resulting from the rise in cryptocurrency prices as compensation. We will return it to Genesis customers.
James’ lawsuit stymied Genesis’ efforts to restart its business and ultimately pushed the company toward bankruptcy liquidation.
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