Dietrich Knauth
NEW YORK (Reuters) – Failed crypto lender Genesis and cryptocurrency exchange Gemini have returned more than $2 billion in crypto to 232,000 retail clients through their jointly managed Gemini Earn program, giving clients a 242% return on assets locked up since January 2023. Gemini reported. Wednesday.
Unlike other cryptocurrency companies that went bankrupt after the 2022 market crash, Genesis was able to return customers’ cryptocurrency to them instead of liquidating a limited pool of assets and returning them in cash.
Customers who lent one Bitcoin to Genesis will receive one Bitcoin back, taking advantage of the coin’s sharp rise in price since the company’s bankruptcy, Gemini said. Since January 2023, the price has more than tripled to more than $67,000.
“We are thrilled to be able to achieve this recovery 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.”
Gemini customers will receive about 97% of the repayment immediately and the remainder within 12 months, Gemini said.
Genesis previously estimated that its clients, including large investors who did not participate in the Earn program, would receive a 77% recovery in the event of bankruptcy. Gemini said its clients benefited from a $50 million settlement contribution made by Gemini, as well as settlements that allowed Genesis to sell shares of Grayscale’s Bitcoin and Ethereum trusts.
Gemini customers who participated in the Gemini Earn program lent their cryptocurrency to Genesis and earned interest on their loan assets. Gemini Earn had a total asset value of $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 misled investors and sued Genesis, Gemini and Genesis’ parent company Digital Currency Group over the program.
In February, James reached an agreement with Genesis that would require Genesis to pay Earn customers ahead of other creditors, including New York State and Digital Currency Group.
DCG argued that payments to Genesis customers should be based on the value of crypto assets in January 2023. According to this argument, which the judge rejected on May 17, DCG could gain “extra” value from rising cryptocurrency prices rather than from rising cryptocurrency prices. than returning it to Genesis customers.
James’ lawsuit thwarted Genesis’ efforts to revive its business, pushing the company into bankruptcy instead.