Crypto exchange Gemini confirmed via a Wednesday, May 29 update that it will payout crypto to the Gemini Earn lending customers valued over $2 billion.
The New York-headquartered crypto platform Gemini revealed via the Wednesday brief that all users of the defunct Earn program will receive $2.18 billion worth of crypto via an in-kind distribution.
Gemini Earn Customers Receiving 100% In-kind Payout
Gemini clarified via the press release that the payout in-kind signals an unprecedented recovery among the embattled crypto firms that plunged into bankruptcy.
Gemini touted that the Gemini Earn clients will receive 100% of the crypto balances. The payout comes amidst the substantial recovery of digital assets since the late 2022 figures.
The payout arose from the crypto crisis witnessed in late 2022 when crypto exchange FTX suffered a sudden implosion. The collapse dragged several crypto firms into bankruptcy, incapacitating the Gemini Earn lending platform.
An estimated 232,000 customers of Gemini Earn were unable to access their crypto. The collective crypto assets were valued at $940 million.
The Gemini Earn offered users the ability to lend their Bitcoin earnings. Notably, the users will receive their crypto back worth nearly quadruple in November 2022. Besides Bitcoin, the Earn program featured other cryptos with varying value shifts.
The journey of the crypto exchange Gemini traces back to 2014 when Winklevoss twins Cameron and Tyler established the platform.
Gemini would plunge into a protracted dispute with crypto lender Genesis over Earn. The bankrupt crypto lending platform Genesis froze customer withdrawals in late 2022 and sought Chapter 10 bankruptcy protection. Genesis is a wholly owned Digital Currency Group (DCG) subsidiary.
Gemini would see the dispute turn into a heated exchange with Genesis, DCG, and the DCG’s executives.
The payout proposed by Gemini manifests a 232% surge in the dollar value of the crypto since Genisis halted withdrawals. The 100% in-kind payment for the Gemini Earn customers contrasts the resolutions and proposals by other crypto bankruptcies.
The bankrupt crypto exchange FTX revealed that it anticipates returning 100% of funds owed to customers when measured in US dollars. The figures captured in the proposal reflect depressed crypto prices relative to the assets’ worth when filing for bankruptcy.
Crypto Firms Settlement with Regulators
Several months before the Wednesday announcement, Gemini revealed plans to payout $1.1 billion in crypto to Earn users. The announcement in February was reached as Gemini disclosed a $37 million settlement with the New York Department of Financial Services (NYDFS) for engaging in alleged unsafe and unsound practices.
The February settlement required Gemini to allocate $40 million to boost the recovery of user funds. Gemini updated the figure on Wednesday to $50 million, with the in-kind distribution portraying 97% of the cryptos owed to the Earn users.
Gemini indicated that the balances will be distributed to customers by 2025.
In March, the Gemini Earn program saw bankrupt crypto lender Genesis disclose that they were paying $21 million towards settling charges posed by the US Securities and Exchange Commission (SEC).
Genesis indicated that the Gary Gensler-led SEC had alleged the lender engaged in unregistered securities sales via Gemini Earn’s crypto lending initiative.
In October 2023, Gemini leveled charges against Genesis, seeking control over Graysale’s Bitcoin Trust (GBTC) shares valued at $1.6 billion (GBTC).
In its submission, Gemini alleged that Genesis pledged the funds to them. The Winklevoss-owned crypto exchange would state that Genesis only delivered half of the claimed shares in the security agreement.
Gemini revealed that it utilized a portion of the capital to satisfy the claims of the Gemini Earn program.
Gemini president Cameron Winklevoss would acknowledge the hardship meted out by the protracted process to the users in a subsequent statement. The Gemini co-founder expressed excitement at realizing the 100% in-kind recovery for the clients.
Editorial credit: Burdun Iliya / Shutterstock.com
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