Gemini declared on Wednesday that all digital assets belonging to its Gemini Earn members have been returned in kind. As to the company’s press release, this implies that if a consumer lends one bitcoin to the Earn program, they will get one bitcoin back. According to Gemini, $2.18 billion in digital assets have been returned in kind to Earn members. Since Genesis, Gemini’s Earn partner, stopped making withdrawals, Gemini had to halt withdrawals from its Earn program. This is a 232% recovery.
Based on statistics from CoinDesk Indices, bitcoin has increased by almost 200% since then. In February, Gemini made the initial announcement that, as part of Genesis’ bankruptcy settlement, it would restore all of its clients’ assets.
“From the start, Gemini’s goal was to obtain the return of 100% of its users’ digital assets from Genesis, and Gemini was dedicated to a coin-for-coin recovery,” Anson Frelinghuysen, a partner at Hughes Hubbard & Reed LLP and Gemini’s lead bankruptcy counsel, said in an interview.
Gemini contributed $50 million to ensure Earn users’ recovery, with 97% of digital assets distributed today and the remaining balance expected within 12 months, it said in a release.
“Throughout the restructuring process, Gemini steadfastly advocated for its users and, as a result of these efforts, was able to obtain a completely unprecedented 232% overall recovery for Gemini Earn users,” Frelinghuysen continued.
The U.S. Securities and Exchange Commission and the Attorney General of New York have expressed interest in the link between Genesis and Gemini, and the two businesses have filed a lawsuit against one other. With 60 million Grayscale Bitcoin Trust (GBTC) shares committed as collateral, Gemini filed a lawsuit against Genesis Global Capital in October 2023, seeking $1.6 billion in damages. According to the lawsuit, ownership of these shares would resolve the claims of Gemini Earn clients whose withdrawals were frozen by Genesis in 2022. Genesis is suing Gemini in parallel to recoup $689 million, claiming that Gemini unfairly profited from favorable transfers at the expense of other creditors.
Afterwards, in March 2024, Genesis Global Capital consented to settle SEC accusations pertaining to the Gemini Earn program by paying a $21 million civil penalty. A judge accepted a $2 billion settlement by the New York Attorney General as part of Genesis’ bankruptcy, creating a victims’ fund for New Yorkers who invested more than $1.1 billion in the Gemini Earn scheme. This deal also prohibited Genesis from conducting business in the state.
“It’s important to note that the Genesis bankruptcy was not a crypto problem,” said Tyler Winklevoss, Co-Founder and CEO of Gemini, in a statement. “It was old-fashioned financial fraud compounded by a lack of regulatory clarity.”