Gemini, the crypto exchange, has reached an agreement in principle with Genesis to distribute $1.8 billion to its Earn users as part of a settlement plan. The restitution of digital assets to affected users will exceed the original amount of $1.1 billion due to asset appreciation since withdrawals were halted in November 2022. If approved by the Bankruptcy Court, Earn users can expect to receive about 97% of their assets within the next two months, with the remaining balance returned over the next year.
Gemini’s settlement with Genesis:
– Gemini has outlined an agreement in principle with Genesis to resolve the disruption caused by the Earn program.
– The settlement involves the restitution of digital assets to affected users.
– The total value of assets now exceeds $1.1 billion by $700 million due to asset appreciation.
– If approved by the Bankruptcy Court, Earn users should receive about 97% of their assets within two months.
– The remaining balance will be returned over the next 12 months.
Gemini’s appreciation for the settlement:
– Gemini expressed gratitude towards the New York Department of Financial Services (DFS) for its role in the settlement.
– The company stated that this settlement delivers a coin-for-coin recovery for Earn users.
– Users will receive their assets back in kind, meaning if they lent one bitcoin, they will receive one bitcoin back.
The involvement of DFS and Gemini’s fine:
– According to DFS, Gemini will pay a $37 million fine for major failures impacting its stability and safety.
– Gemini is also set to contribute $40 million towards the Genesis Global Capital bankruptcy in coordination with the Bankruptcy Court.
– Superintendent Adrienne A. Harris highlighted that Gemini failed to conduct due diligence on an unregulated third party, resulting in harm to Earn customers.
– Harris emphasized that this settlement is a win for Earn customers who have a right to their entrusted assets.
Background on GGC and the failed Earn program:
– The Earn program was launched on February 1, 2021, allowing Gemini customers to lend their cryptocurrencies to the unregulated Genesis Global Capital (GGC).
– Customers earned interest through this program, but Gemini failed to properly oversee GGC.
– This led to a default on nearly $1 billion in loans by November 2022 and GGC’s subsequent bankruptcy.
– Over 200,000 Earn customers were unable to access their assets due to Gemini’s lack of diligence and inadequate reserves.
– This incident caused reputational and financial damage to both Gemini and its users.
In conclusion, Gemini has reached an agreement in principle with Genesis that outlines a plan to distribute $1.8 billion to its Earn users. The settlement involves the restitution of digital assets, with users expected to receive about 97% of their assets within two months if approved by the Bankruptcy Court. Gemini expresses gratitude towards the DFS for its role in the settlement and emphasizes that this delivers a coin-for-coin recovery for Earn users. The involvement of DFS also resulted in a $37 million fine for major failures impacting Gemini’s stability and safety. The failed Earn program, which allowed customers to lend their cryptocurrencies to GGC, led to significant financial harm for users. This settlement is seen as a win for Earn customers who have the right to their entrusted assets.
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