Gemini’s financial product, Gemini Earn, has suffered losses due to the bankruptcy of its partner, Genesis, which was affected by FTX. As a result, Gemini Earn has suspended withdrawals and halted fund disbursements.
Gemini and DCG have been sued by New York law enforcement for failing to disclose financial risks and allegedly defrauding users of $1.1 billion.
After a suspension of withdrawals 18 months ago, this cryptocurrency exchange, owned by billionaire twins Cameron and Tyler Winklevoss, has fulfilled its commitments to users.
Gemini announced on Wednesday that it will refund $2.2 billion in digital assets to users of the Earn program. Due to the complex situation with its lending partner, Genesis Global Capital, withdrawals were suspended in November 2022.
Gemini informed users that as of the suspension date (November 16, 2022), approximately 97% of the digital assets owed by Genesis can now be used in Gemini accounts.
In the email, Gemini assured users that they would recover all digital assets proportionally. “If you lent out one Bitcoin through the Earn program, you will receive one Bitcoin back. This also means that you will receive any and all value appreciation since lending out the asset.”
According to CNBC, the $2.2 billion payout represents a 232% return on user assets since Gemini froze withdrawals from the Earn program 18 months ago. This is a positive turn for users who faced locked funds and uncertainty.
Similar to debt or wealth management products in Taiwan, it allows users to deposit cryptocurrencies to earn interest income.
The Earn program was launched in 2021, allowing customers to earn high returns by depositing cryptocurrencies into Gemini’s program. Gemini then lent these cryptocurrencies to institutional borrowers through Genesis Global Capital.
However, in November 2022, Genesis Global Capital suspended interest payments and redemptions, causing Gemini to suspend withdrawals from the Earn program. Genesis subsequently filed for Chapter 11 bankruptcy protection in January.
Last week, the New York Attorney General announced a $2 billion settlement with Genesis to compensate defrauded investors, bringing an end to Gemini Earn.
Steaker, a Taiwanese digital asset management platform, was also affected by FTX, resulting in the inability to withdraw funds. Currently, its compensation plan is in the second phase (April 2024), with 219,100 USDC disbursed. FTX has announced an additional 18% compensation, but there is currently no publicly available information regarding Steaker’s response.
Based on user cases investigated by Chain News, 19% of the repayments have been made so far.
These types of wealth management products in Taiwan have faced discussions about “fund-raising” concerns, and various exchanges have suspended the public operation of debt products. The founder of Steaker was detained and denied access during the incident and was subsequently held for 51 days. Finally, in February 2023, he was released on bail with NT$3 million.
This case has not yet been prosecuted, and according to Article 1 of the Criminal Compensation Act, “before a criminal act is not punishable or there is insufficient suspicion of a crime and it is disposed of without prosecution, or a prosecution is withdrawn, or a prosecution is rejected, or a not guilty judgment is finalized, if one has been detained, subjected to forensic detention, or detained, compensation can be applied for.”
FTX currently states that it can provide full compensation, depending on the percentage of “non-stablecoin” assets in Steaker’s user assets at the time, in addition to returning stablecoin assets with interest.
FTX, Gemini, Genesis, Steaker