Gemini to distribute $2.18B in crypto back to Earn users
The distributions mark a 232% recovery from when withdrawals were halted in November 2022
Gemini Earn users will receive $2.18 billion in digital assets through distributions, Gemini said Wednesday.
The multi-billion dollar figure is based on the current crypto prices because distributions will be in-kind (meaning that they won’t be converted to fiat). Gemini noted in its press release that it’s “$1 billion more than when Genesis halted withdrawals in November 2022.”
Back in November 2022, the crypto — from around 232,000 users — was worth $940 million.
The figure is also higher than previously thought. Back in February, the New York Department of Financial Services announced a settlement with Gemini . The regulator stated that the firm would return “at least $1.1 billion” to customers of the Earn program through the Genesis bankruptcy proceedings.
However, it only represents 97% of the digital assets owed to Earn users.
The distributions will happen within the next 12 months, the press release added. The initial distributions are set to start on Wednesday, the company confirmed with Blockworks.
“We are thrilled that we have been able to achieve this recovery for our customers. We recognize the hardship caused by this lengthy process and appreciate our customers’ continued support and patience throughout,” Cameron Winklevoss, Gemini ’s co-founder, said in a statement.
Read more: Gemini settles with NY regulators, will return $1B to Earn customers via Genesis bankruptcy
But the path to the distributions hasn’t been a clear or easy one. Gemini and Genesis have engaged in heated back-and-forths over returning assets to Earn customers.
The two were also named in a lawsuit, alongside Digital Currency Group, from the New York Attorney General last year. The NYAG accused Genesis and Gemini of conspiring on “fraudulent schemes” in regards to their Earn product. It also accused DCG , the parent company of Genesis, of coordinating with the two companies on the scheme.
Earlier this month, the NYAG announced that its previously disclosed settlement with Genesis — which received court approval earlier this year — would create a Victims Fund for Genesis creditors. The fund is set to receive roughly $2 billion from the remaining assets of the bankrupt lender.
Gemini declined to comment when asked if any of the Victims Fund would be going towards the Earn distribution.
In February, Gemini announced that the Genesis settlement meant that it could begin giving crypto back to Earn users.
Part of this comes from share sales of Grayscale’s bitcoin trust, which was converted into an ETF earlier this year. Gemini argued that Genesis owed the company 62 million shares as promised to secure Earn user loans, but Gemini said the bankrupt lender didn’t fully come through.
Read more: Genesis gets court approval to offload $1.6B Grayscale shares
“Even though Genesis failed to deliver more than half of the promised collateral to Gemini, Gemini was able to use the delivered collateral to achieve today’s recovery,” the press release said. Additionally, Gemini contributed $50 million to user recovery.
The distribution plan for Earn users comes as the Genesis bankruptcy nears an end.
Last week, a bankruptcy judge ruled against an objection from DCG on the liquidation plan for the bankrupt lender. While the proceedings aren’t over yet, it’s beginning to look like the saga is nearing an end.
“It’s important to note that the Genesis bankruptcy was not a crypto problem,” Tyler Winklevoss, CEO of Gemini, said in a statement. “It was old-fashioned financial fraud compounded by a lack of regulatory clarity. To that end, we will continue to fight for clear rules and guidance for our industry that foster both innovation and consumer protection. And we will win this fight. The future is bright.”
Updated May 29, 2024 at 10:23 am ET: Clarified date on which Gemini confirmed distribution plans.
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- DCG
- Gemini
- Genesis
- NYAG
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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