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Gemini customers recover more than $2 billion in crypto from Genesis bankruptcy By Reuters
By Dietrich Knauth
NEW YORK (Reuters) – Bankrupt crypto lender Genesis and crypto exchange Gemini have returned more than $2 billion in crypto to 232,000 retail customers under their jointly-run Gemini Earn program, offering customers a 242% return on stranded assets since January 2023, Gemini said on Wednesday.
Unlike other crypto companies that went bankrupt after a stock market crash in 2022, Genesis was able to return their customers’ cryptocurrencies to them rather than liquidating a limited pool of assets and paying them back in cash.
Customers who loaned a bitcoin to Genesis will get one back, benefiting from the coin’s dramatic price increase since the company’s bankruptcy date, Gemini said. The price of has more than tripled since January 2023, reaching over $67,000.
“We are thrilled to have been able to achieve this recovery for our customers,” Cameron Winklevoss, co-founder of Gemini, said in a statement. “We recognize the difficulties caused by this lengthy process and appreciate the continued support and patience of our customers throughout.”
Gemini customers will receive approximately 97% of the refund immediately and the remainder within 12 months.
Genesis previously estimated that its clients, including large investors who were not part of the Earn program, would benefit from a 77% recovery in bankruptcy.
“We did not cap their claims at the value as of the date of the petition,” Genesis attorney Sean O’Neal said Wednesday. “Now we must focus on distributions to Genesis’ remaining creditors.”
Gemini customers who participated in the Gemini Earn program lent their crypto to Genesis and received interest on their loaned assets. The total value of Gemini Earn’s assets was $940 million when Genesis froze customer accounts in November 2022, Gemini said.
New York Attorney General Letitia James alleged that the Gemini Earn program was a “scam” that misled investors, and she sued Genesis, Gemini and Genesis’ parent company, Digital Currency Group, over the program .
James reached an agreement with Genesis in February that required Genesis to repay Earn customers ahead of other creditors, including the state of New York and Digital Currency Group.
“When investors suffer losses due to fraud and manipulation, they deserve to be made whole,” James said in a statement.
DCG had argued that Genesis customers should be reimbursed based on the value of the crypto assets in January 2023. Under this argument, which a judge overturned on May 17, DCG could have taken the “excess” value of the rising crypto prices, rather than returning it to Genesis customers.
James’ lawsuit disrupted Genesis’ efforts to restart operations, causing the company to turn to bankruptcy liquidation.