Gemini customers have successfully reclaimed over $2 billion in cryptocurrency from the bankrupt crypto lender Genesis. This recovery marks a significant milestone for the 232,000 retail customers involved in the Gemini Earn program, who have seen a 242% return on their assets since January 2023.

Key Takeaways

• Over $2 billion in crypto returned to Gemini customers.
• 232,000 retail customers benefited from the recovery.
• Customers saw a 242% return on assets since January 2023.
• Immediate repayment of 97% of the assets, with the remainder to be paid within 12 months.

A Remarkable Recovery

Unlike other crypto companies that went bankrupt following the 2022 market crash, Genesis managed to return customers’ crypto assets rather than liquidating them and paying back in cash. This unique approach allowed customers to benefit from the dramatic price increase of cryptocurrencies since the company’s bankruptcy.

For instance, customers who loaned one bitcoin to Genesis will receive one bitcoin back, benefiting from the coin’s price surge to over $67,000 since January 2023.

Statements from Gemini

“We are thrilled to have been able to achieve this recovery for our customers,” said Cameron Winklevoss, co-founder of Gemini. “We recognize the hardship caused by this lengthy process and appreciate our customers’ continued support and patience throughout.”

Breakdown of Repayment

• 97% Immediate Repayment: Customers will receive about 97% of their repayment immediately.
• Remaining 3%: The remaining 3% will be paid within 12 months.

Legal and Financial Context

Genesis had initially estimated a 77% recovery for its customers, including larger investors not part of the Earn program. However, Gemini customers benefited from a $50 million settlement contribution by Gemini and settlements that allowed Genesis to sell shares in Grayscale bitcoin and ethereum trusts.

The total value of the Gemini Earn assets was $940 million when Genesis froze customer accounts in November 2022. New York Attorney General Letitia James has alleged that the Gemini Earn program was a “scam” that misled investors and has sued Genesis, Gemini, and Genesis’s parent company, Digital Currency Group (DCG).

Legal Settlements and Implications

James reached a settlement with Genesis in February, requiring Genesis to repay Earn customers before other creditors, including New York state and DCG. DCG had argued that Genesis’s customers should be repaid based on the crypto assets’ value in January 2023. However, a judge overruled this argument on May 17, ensuring that the excess value from the rise in crypto prices would be returned to Genesis customers.

James’ lawsuit disrupted Genesis’s efforts to restart its business, pushing the company towards bankruptcy liquidation.