Gemini Announces Full Recovery of Earn Users’ Digital Assets

As a seasoned crypto investor who has closely followed the developments between Genesis and Gemini, I cannot hide my relief and satisfaction with the recent turn of events. The announcement that Gemini Earn users have received 100% of their digital assets back in-kind is a significant victory, especially considering the turbulent journey that began when Genesis halted withdrawals last year.

On Wednesday, Gemini declared that all digital assets owed to Gemini Earn users have been returned in the same form.

As an analyst, I would explain it this way: When a customer loans one bitcoin to the Earn program, they are guaranteed to get one bitcoin back in return, according to the company’s statement.

As an analyst, I would rephrase that statement as follows: Based on the latest update from Gemini, the digital assets worth approximately $2.18 billion have been returned to Earn users. This is a substantial 232% recovery since Genesis, Gemini’s partner in the Earn program, halted withdrawals and consequently required Gemini to pause its own Earn program as well.

Since then, bitcoin is up over 200% according to CoinDesk Indices data.

In February, Gemini initially disclosed its intention to refund all customer assets as part of the completion of Genesis’ bankruptcy proceedings.

As the lead bankruptcy counsel for Gemini at Hughes Hubbard & Reed LLP, I can confirm that our team has been steadfastly committed to recovering 100% of our users’ digital assets from Genesis since the outset of this process. Our focus has been on a coin-for-coin recovery approach.

In a recent announcement, Gemini declared that they have invested fifty million dollars towards helping Earn users recover their funds. Of the total digital assets involved, ninety-seven percent have been distributed already. The remaining portion is anticipated to be dispersed within the next twelve months.

During the restructuring phase, Gemini strongly championed for their users’ interests. This persistent advocacy led to an extraordinary 100.2% return on investment for each user in Gemini Earn – a truly unprecedented outcome.

Lawsuits and regulator interest

The legal dispute over the connection between Genesis and Gemini has garnered attention from regulatory bodies such as the US Securities and Exchange Commission and the New York Attorney General.

The lawsuit brought by Gemini’s customers alleges that taking control of these shares would fulfill the claims of those affected by Genesis’ withdrawal freezes in 2022. At the same time, Genesis has filed a lawsuit against Gemini seeking to recover $689 million, accusing it of biased transfers that disadvantaged other creditors.

In March 2024, Genesis Global Capital reached an agreement with the Securities and Exchange Commission (SEC) to pay a civil penalty of $21 million to resolve allegations connected to the Gemini Earn program.

In connection with Genesis’ bankruptcy proceedings, a New York court endorsed a $2 billion agreement by the Attorney General to create a compensation fund for New York residents who had invested more than $1.1 billion via the Gemini Earn program. The ruling also prohibited Genesis from conducting business within the state.

“According to Tyler Winklevoss, Co-Founder and CEO of Gemini, it’s crucial to acknowledge that the Genesis bankruptcy wasn’t caused by crypto issues. Instead, it stemmed from traditional financial deceit, worsened by regulatory ambiguity.”