In a remarkable turn of events, bankrupt crypto lender Genesis and crypto exchange Gemini have returned more than $2 billion in crypto to 232,000 retail customers participating in their jointly managed Gemini Earn program. 

According to a statement released by Gemini on Wednesday, this development has resulted in an impressive 242% return on assets locked up since January 2023.

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• Gemini customers recovered over $2 billion in crypto from Genesis bankruptcy, seeing a 242% return on assets locked up since January 2023.

• Unlike other bankrupt crypto companies, Genesis returned customers’ crypto directly, allowing them to benefit from Bitcoin’s dramatic price increase.

• New York Attorney General Letitia James was crucial in ensuring Genesis’s customers were prioritized and fairly compensated.

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Gemini Customers Recover Over $2 Billion in Crypto from Genesis Bankruptcy

Unlike other crypto companies that filed for bankruptcy following the 2022 market crash, Genesis has managed to return customers’ crypto directly rather than liquidating a limited pool of assets and repaying them in cash. 

This means that customers who loaned one bitcoin to Genesis will receive one back, benefiting significantly from the coin’s dramatic price increase since the company’s bankruptcy. 

The price of Bitcoin has more than tripled since January 2023, surging past $67,000.

Gemini co-founder Cameron Winklevoss expressed his delight at the outcome, stating, “We are thrilled to have been able to achieve this recovery for our customers. We recognize the hardship caused by this lengthy process and appreciate our customers’ continued support and patience.”

Under the repayment plan, Gemini customers will receive approximately 97% of the repayment immediately, with the remainder to be paid within 12 months. 

Genesis attorney Sean O’Neal emphasized the company’s commitment to its customers: “We didn’t cap their claims at the petition date value. Now we need to focus on making distributions to Genesis’s remaining creditors.”

The Gemini Earn program allowed customers to loan their crypto to Genesis in exchange for interest on their loaned assets. 

According to Gemini, when Genesis froze customer accounts in November 2022, the total value of the Gemini Earn assets was $940 million.

However, the program has not been without controversy. 

New York Attorney General Letitia James has alleged that the Gemini Earn program was a “scam” that misled investors. 

She has filed a lawsuit against Genesis, Gemini, and Genesis’s parent company, Digital Currency Group (DCG). 

In February, James reached a settlement with Genesis that required the company to repay Earn customers before other creditors, including New York state and DCG.

“When investors suffer losses because of fraud and manipulation, they deserve to be made whole,” James stated.

DCG had initially argued that Genesis’s customers should be repaid based on the value of the crypto assets in January 2023. 

This would have allowed DCG to take the “excess” value from the rise in crypto prices rather than returning it to Genesis customers. 

However, a judge overruled this argument on May 17.

The lawsuit filed by James disrupted Genesis’s efforts to restart its business, ultimately leading the company to pivot toward bankruptcy liquidation.

Despite this setback, the successful return of over $2 billion in crypto to Gemini Earn customers marks a significant milestone in the ongoing saga of crypto bankruptcies. 

It reminds us of the importance of investor protection in the volatile world of cryptocurrencies.

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