Gemini to Repay Earn Program Customers Over $1 Billion
Gemini Trust Company, founded by the Winklevoss twins in 2014, has reached a settlement with Genesis and other creditors in the company’s bankruptcy process. As a result, customers of the Earn Program will receive 100% of their digital assets back. The repayment will be made on a 1:1 basis, meaning customers will receive their assets in the same quantity as they had lent them into the program. The total value of the assets being returned is over $1.8 billion at today’s prices.
Details of the Settlement
If approved by the Bankruptcy Court, customers can expect to receive approximately 97% of their assets within a two-month timeframe. The remaining 3% will be returned within 12 months after approval. Gemini has clarified that the Bankruptcy Court process may take up to two months to complete, and the settlement is subject to definitive documentation.
Genesis Agreement With the SEC
The Earn Program was launched in partnership with Genesis Global Capital (GGC) in February 2021. Users could earn passive income by loaning their digital assets through the program. However, withdrawals from the program were suspended in November 2022 at Genesis’s request and permanently terminated in January 2023.
Following these events, both Gemini and GGC faced charges from the US Securities and Exchange Commission (SEC) for allegedly offering unregistered securities through the Earn program. GGC recently reached a settlement with the SEC, agreeing to pay a $21 million civil penalty.
Gemini Fined for Failed Due Diligence
In addition to the settlement with Genesis, Gemini will contribute $40 million to the Genesis Global Capital bankruptcy for the benefit of Earn program customers. The crypto exchange will also pay a $37 million fine to the New York State Department of Financial Services (NYDFS) for its failures in safeguarding customers and maintaining adequate reserves throughout the life of the Earn program.
According to NYDFS’s Superintendent Adrienne Harries, Gemini’s lack of due diligence on GGC resulted in harm to Earn customers who were unable to access their assets after GGC experienced financial difficulties. The settlement with Gemini is seen as a win for customers who will regain their assets.
As part of the settlement, NYDFS reserves the right to take further legal action against Gemini if the company fails to fulfill its obligation of returning at least $1.1 billion to Earn program customers.
Hot Take: A Positive Outcome for Earn Program Customers
Gemini’s agreement to repay over $1 billion to Earn program customers is a positive development that addresses the losses suffered by users. The repayment on a 1:1 basis ensures that customers receive their assets back in full, including any appreciation since they lent them into the program. With approval from the Bankruptcy Court, customers can expect to receive most of their assets within two months and the remainder within a year. This resolution brings closure to an unfortunate chapter in Gemini’s history and highlights the importance of due diligence when partnering with third parties in the crypto industry.
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