Gemini Unveils Plans to Pay Users of Its Defunct Earn Program 100% of Lost Funds Worth $1.8B 

Gemini and Genesis have agreed on a settlement that would see customers of its now-defunct Earn program receive 100% of their locked-up crypto assets worth $1.8 billion. 

Leading crypto exchange Gemini has announced that it has reached a settlement in principle with Genesis. The settlement, if approved by the bankruptcy court, would enable customers of the now-defunct Earn program to receive 100% of their locked-up crypto holdings.

Gemini to Reimburse Users’ Assets in Kind 

Notably, Gemini’s Earn customers will receive the exact amount of their crypto assets committed to the Earn program, alongside all appreciation recorded since Genesis halted withdrawals in November 2022. 

For instance, customers who lent 1 Bitcoin in the Earn program before the service was shuttered will receive 1 BTC in return once the court approves. Additionally, Earn customers will also receive any form of appreciation that the assets have accrued over the past 15 months. 

At the time Genesis halted withdrawals in November 2022, the total assets were worth $1.1 billion. Following the recent spike in crypto prices, the assets’ value spiked by $700 million to $1.8 billion. 

Per the announcement, Gemini will reimburse 97% of affected Earn users’ assets within the next two months if the bankruptcy court approves the settlement. Also, the affected users will receive the remaining 3% within the next 12 months. 

Furthermore, Gemini expressed gratitude to the New York Department of Financial Service (NYDFS) for the role it played during the settlement. 

Bloomberg Analyst Reacts 

As expected, the announcement stirred reactions among crypto enthusiasts, with Bloomberg’s ETF analyst James Seyffart commenting on the development. 

Seyffart described Gemini’s plan to pay affected Earn users in kind as massive. Furthermore, he illustrated the tremendous spike in Bitcoin and Ethereum prices since Genesis halted withdrawal service.  

He compared BTC’s price in November 2022, when it traded at $20,000, to its recent surge to $61,000. Similarly, he pointed out that Ethereum has also surged in value from around $1,500 in November 2022 to $3,300 at the time of his tweet. 

WOW. Holy cow @Gemini is saying that EARN customers stuck in the Genesis bankruptcy are likely to get "100% of their digital assets back in kind" under the current potential settlement

I repeat… IN-KIND. That's absolutely MASSIVE

$20k BTC vs $61k BTC
$1.5k ETH vs $3.3k ETH https://t.co/0NLOo6yXDB

— James Seyffart (@JSeyff) February 28, 2024

Meanwhile, Gemini also revealed other terms of the settlement, which include committing $40 million to Genesis bankruptcy proceedings and paying a fine of $37 million to the DFS. 

Background of the Case 

Launched in February 2021, the Earn program allowed Gemini customers to receive interest by loaning their crypto assets to Genesis. However, Gemini failed to conduct due diligence on Genesis, which did not hold the necessary license to engage in the Earn program. 

The firm also defaulted on $1 billion in loans, with over 200,000 Earn customers affected. 

Consequently, the New York Attorney General’s Office sued Genesis for fraud, with the company filing for bankruptcy in January 2023.