Bankrupt crypto lender Genesis and cryptocurrency exchange Gemini managed to return over $2 billion in crypto to their retail customers.
The 232,000 customers of its jointly managed Gemini Earn program have earned a staggering 242% return on assets locked up since January 2023, Gemini announced today.
Unlike other crypto companies that went bankrupt following the 2022 market crash, Genesis was able to return assets to customers in cryptocurrency rather than liquidating a limited pool of assets and paying them back in cash. This means customers who lend one Bitcoin to Genesis will receive one BTC back, taking advantage of the coin's dramatic price increase since the company went bankrupt. Bitcoin's price has more than tripled since January 2023, reaching over $67,000.
“We are thrilled to be able to deliver this recovery for our customers,” said Cameron Winklevoss, co-founder of Gemini. “We recognize the challenges caused by this lengthy process and appreciate our customers' continued support and patience.”
Gemini customers will receive approximately 97% of the refund immediately, with the remainder due within 12 months. Genesis had previously estimated that its customers, including larger investors who are not part of the Earn program, would receive a 77% refund in the event of bankruptcy. Gemini said its clients benefited from a $50 million settlement contribution by Gemini, as well as agreements that allowed Genesis to sell stakes in the Grayscale Bitcoin and Ethereum trusts.
When Genesis froze customer accounts in November 2022, the total value of Gemini Earn assets was $940 million. New York Attorney General Letitia James claimed that the Gemini Earn program was a “scam” that misled investors and filed a lawsuit against Genesis, Gemini, and Genesis' parent company Digital Currency Group (DCG) over the program.
James reached a settlement with Genesis in February requiring Genesis to repay Earn customers before other creditors, including New York state and DCG.
*This is not investment advice.
