Genesis and Gemini have taken steps to compensate users affected by their failed Earn program.

According to a March 19 statement from Gemini, Genesis asked a bankruptcy court to approve a settlement in principle that will distribute funds to users.

The request will be considered during an upcoming hearing on April 16.

If the settlement is approved, Earn users who had their accounts suspended should receive 100% of their assets — with 97% of the amount expected to be reimbursed within weeks of court approval. The remaining funds will be distributed as they are obtained from Genesis’ parent, Digital Currency Group.

 

The latest update suggests that Earn users will collectively receive $2 billion of crypto at current prices — $900 million higher than it was when the service was halted in 2022.

Gemini to contribute $50 million

Gemini said it will contribute $50 million of the funds returned to users, and it is also permitted to carry out an expedited delivery of assets regardless of the outcome of Genesis’ bankruptcy plan.

In a filing supporting the settlement, Gemini wrote:

“Gemini is dedicated to the success of the Settlement Agreement … the Settlement Agreement presents the best and only path to a near-term coin-for-coin recovery for the Gemini Lenders.”

The settlement additionally resolves adversary proceedings between Genesis and Gemini that could have affected the distribution of funds.

Earn halted 15 months ago

Gemini and Genesis originally partnered to offer Gemini Earn, a lending product that provided users with a return on their crypto deposits, in February 2021.

The service suspended withdrawals in November 2022 amidst the collapse of FTX and a broader lending crisis. Earn was discontinued in January 2023, and Genesis filed for partial bankruptcy that month.

 

The US Securities and Exchange Commission also filed charges against Gemini and Genesis in January 2023. Those charges have partially concluded, as the SEC announced a settlement that will see Genesis pay a $21 million civil penalty after satisfying bankruptcy claims.

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Author: Mike Dalton

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