Crypto Lender Genesis Returns Over $2 B in Bitcoin to Gemini Customers

In a major win for cryptocurrency investors, bankrupt crypto lender Genesis, in collaboration with crypto exchange Gemini, has completed the return of over $2 billion worth of Bitcoin to 232,000 retail clients who participated in their Gemini Earn program. This remarkable feat represents a 242% return on the assets these clients entrusted to the program since January 2023.

Unlike many crypto firms that collapsed during the 2022 market crash, Genesis managed to recover and return customers' actual Bitcoin holdings instead of selling off a limited pool of assets and reimbursing them in cash. This means that customers who lent one Bitcoin to Genesis received one Bitcoin back, benefitting significantly from the cryptocurrency's price surge. With Bitcoin currently trading at over $67,000, its value has tripled since January 2023.

Cameron Winklevoss, co-founder of Gemini, expressed in a statement that Gemini was thrilled to have secured this full recovery for its Gemini Earn customers. He acknowledged the challenges posed by the extended process and appreciated the customers' unwavering support and patience.

Gemini expects to distribute nearly 97% of the recovered funds to customers promptly, with the remaining portion following within a year.

It's important to note that Genesis had previously projected a 77% recovery rate for its overall clientele, including larger investors beyond the Earn program. Gemini attributes the higher recovery rate for its Earn customers to a $50 million contribution from the company as part of a settlement, along with agreements that allowed Genesis to sell shares in Grayscale trusts tied to Bitcoin and Ethereum.

The Gemini Earn program allowed customers to earn interest by lending their cryptocurrency to Genesis. At the time Genesis froze customer accounts in November 2022, the total value of assets in the program was approximately $940 million.

However, the road to recovery wasn't smooth. New York Attorney General Letitia James accused the Gemini Earn program of misleading investors and filed lawsuits against Genesis, Gemini, and Digital Currency Group (DCG), the parent company of Genesis.

A key point of contention was how much customers should be reimbursed. James and Genesis eventually reached a settlement prioritizing reimbursement for Earn customers before addressing other creditors. DCG, on the other hand, argued that customers should only receive the value their Bitcoin held in January 2023. This argument, which could have allowed DCG to keep the profits from the Bitcoin price increase, was fortunately rejected by a judge on May 17th.

The legal battle with the New York Attorney General ultimately forced Genesis to file for bankruptcy, disrupting its attempts to resume normal operations. However, thanks to the successful recovery efforts, Gemini Earn customers have emerged with a significant windfall.