Tech
Crypto Exchange Gemini Returns Over $2 Billion to Customers After Genesis Failure
Bankrupt Cryptocurrency Lender Genesis and Gemini cryptocurrency exchange have returned more than $2 billion in cryptocurrency to 232,000 retail customers in their jointly managed Gemini Earn program, offering customers a 242% return on assets locked up since January 2023, Gemini said Wednesday.
Unlike other cryptocurrency companies that went bust after the market crash in 2022, Genesis was able to return crypto to customers rather than liquidate a limited set of assets and pay them back in cash.
Customers who lent Genesis a bitcoin will get one back, benefiting from the coin’s dramatic price increase since the company went bust, Gemini said. Bitcoin’s price has more than tripled since January 2023, rising to over $67,000.
“We are thrilled to have been able to make this recovery happen for our customers,” said the Gemini co-founder. Cameron Winklevoss said in a statement. “We recognize the difficulties this lengthy process has caused and appreciate our customers’ continued support and patience throughout the process.”
Gemini customers will receive about 97% of their money back immediately and the remainder within 12 months, Gemini said.
Genesis had previously estimated that its clients, including larger investors who were not part of the Earn program, would receive a 77% recovery in the bankruptcy. Gemini said its clients benefited from a $50 million transaction contribution made by Gemini, as well as transactions that allowed Genesis to sell shares in the Grayscale Bitcoin and Ethereum trusts.
Gemini clients who participated in the Gemini Earn program lent their cryptocurrency to Genesis and received interest on their lent assets. The total value of Gemini Earn assets was $940 million when Genesis froze customer accounts in November 2022the Twins said.
New York Attorney General Letitia James said the Gemini Earn program was a “scam” that misled investors and sued Genesis, Gemini, and Genesis’ parent company, Digital Currency Group, over the program.
In February, James reached a settlement with Genesis that required it to repay Earn’s customers before other creditors, including the state of New York and Digital Currency Group.
DCG had argued that Genesis customers should be reimbursed based on the value of the cryptocurrency in January 2023. Under that argument, which a judge struck down on May 17, DCG could have taken the “excess” value from rising cryptocurrency prices, rather than returning it to Genesis customers.
James’ lawsuit stymied Genesis’ efforts to restart its business, prompting the company to instead seek bankruptcy liquidation.
—Dietrich Knauth, Reuters
Recognize your technological innovation by applying for this year’s competition The next big tech awards! Deadline for applications: Friday, July 12.