Gemini To Reimburse Earn Customers In Full

Gemini may have achieved the impossible, squaring the circle of making Earn customers whole, in crypto.

When will customers get their money back?

In a move unprecedented in the crypto space, Gemini has announced that it now hopes to pay back its Earn customers who lost over a billion dollars when crypto lender Genesis went bankrupt, in full—and in crypto.

Restoring Trust

Gemini, a well-regulated and respected exchange based in New York, was caught out by the collapse of FTX and the collateral damage that occurred at the end of 2022.

Gemini's Earn program allowed the exchange's customers to generate up to 8% returns on their crypto. However, when lender Genesis failed, over a billion dollars in customer money was lost. Over the past year, Gemini's lawyers have been pursuing Genesis for the funds. The Winkelvoss Twins have had a number of acrimonious and public arguments with Barry Silbert, who they accuse of various illegal activities, and simply bad behavior. "Not even Sam Bankman-Fried was capable of such delusion," they told Silbert in one open letter, after the Genesis founder seemingly tried to play the victim card.

Genesis has been selling vast sums of assets in recent weeks, to meet its obligations. These liquidations partly explain GBTC redemptions, since the company had over $1 billion of Grayscale's ETF on its books.

Are Genesis GBTC Sells Starting?
First FTX, now Genesis. The delinquents of the last cycle still cast their shadow over the markets.

Restitution In Full

Finally, it may be over. And somehow, Gemini has hammered out an amazing deal for its customers. 100% of funds returned, in kind.

This means, for example, that if you had lent one bitcoin in the Earn program, you will receive one bitcoin back as part of this settlement. And it means that you will receive any and all appreciation of your assets since you lent them into the Earn program. If approved, we will be returning over $1.8 billion in value (at today’s prices) — $700 million more than when Genesis halted withdrawals on November 16, 2022.

This is very much a rarity in the crypto space. MtGox creditors will receive only a fraction of their original bitcoins, since so much was simply lost through theft, fraud, and mismanagement. In the case of FTX, customers may receive back the fiat equivalent of the money that was in their accounts when the exchange declared bankruptcy, right at the bottom of the bear market.

In Gemini's case, they will receive back what they had staked, coin for coin. In the intervening months, crypto has soared in value.

It's not a done deal, yet, but the finish line looks close. If the arrangements are approved, then Gemini's persistence will have paid off. They will have achieved what most customers will have assumed was impossible: Making them whole, in crypto, in full.

Hats off to the Winklevii for this one.


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