News
Gemini Customers Recover Over $2 Billion in Cryptocurrencies from Genesis Bankruptcy
By Dietrich Knauth
NEW YORK (Reuters) – Bankrupt cryptocurrency lender Genesis and cryptocurrency exchange Gemini have returned more than $2 billion in cryptocurrencies to 232,000 retail customers in their jointly run Gemini Earn program, offering customers a 242% return on frozen assets from January 2023, Gemini said on Wednesday.
Unlike other cryptocurrency companies that went bankrupt after a market crash in 2022, Genesis was able to return customers’ cryptocurrencies to them instead of liquidating a limited pool of assets and paying them back in cash.
Customers who lent a bitcoin to Genesis will receive one back, benefiting from the dramatic rise in the coin’s price since the company went bankrupt, Gemini said. The price of Bitcoin has more than tripled since January 2023, reaching over $67,000.
“We are thrilled that we were able to make this recovery happen for our customers,” Gemini co-founder Cameron Winklevoss said in a statement. “We recognize the difficulties caused by this lengthy process and appreciate our customers’ continued support and patience throughout the process.”
Gemini customers will receive about 97% of their refund immediately and the remainder within 12 months, Gemini said.
Genesis had previously estimated that its customers, including larger investors who were not part of the Earn program, would receive a 77% recovery in the event of bankruptcy. Gemini said its clients benefited from a $50 million contribution made by Gemini, as well as deals that allowed Genesis to sell shares of Bitcoin and Ethereum Trust in Greyscale.
Gemini customers who participated in the Gemini Earn program lent their cryptocurrencies 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 said the Gemini Earn program was a “scam” that deceived investors and sued Genesis, Gemini and Genesis’ parent company, Digital Currency Group, over the program.
James reached a settlement with Genesis in February that required Genesis 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 cryptocurrencies in January 2023. Under that argument, which a judge rejected on May 17, DCG could take the “excess” value from the increase of cryptocurrency prices, rather than returning it to Genesis customers.
James’ lawsuit disrupted Genesis’ efforts to restart its business, prompting the company to move into bankruptcy liquidation instead.
(Reporting by Dietrich Knauth; Editing by Josie Kao)