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 disbursement.
Gemini and DCG are facing a lawsuit filed by New York law enforcement agencies, accusing them of failing to disclose financial risks and defrauding users of $1.1 billion.
After a suspension of withdrawals 18 months ago, this cryptocurrency exchange owned by the billionaire Winklevoss twins has fulfilled its commitments to users.
Gemini has announced that it will refund $2.2 billion to users of the Earn program. Withdrawals were suspended in November 2022 due to the complex situation with its lending partner, Genesis Global Capital.
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.
The email is a follow-up to the previous settlement reached with Genesis and other creditors in the Genesis bankruptcy case. Gemini assures users that they will recover all digital assets in proportion.
According to CNBC, the $2.18 billion refund represents a 232% return on users’ assets since Gemini froze its Earn program withdrawals 18 months ago. It is a positive turn for users who faced locked funds and uncertainty.
Similar to Taiwan’s creditors or financial products, it allows users to deposit cryptocurrencies to earn interest.
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, leading Gemini to suspend Earn program withdrawals. Subsequently, Genesis 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 also affected by FTX’s inability to withdraw funds, is currently in the second phase of its compensation plan, with 219,100 USDC issued. FTX has announced an additional 118% compensation, but there is no public information from Steaker regarding this.
According to user cases investigated by Chain News, 19% of the repayments have been made so far.
These types of financial products have been subject to discussions regarding “fundraising” concerns in Taiwan, and various exchanges have suspended public operations of debt products. The founder of Steaker was detained during the incident and was released on bail of NT $3 million in February 2023.
This case has not yet been prosecuted, and according to Article 1 of the Criminal Compensation Act, “before a disposition of non-prosecution, withdrawal of prosecution, rejection of prosecution, or a final judgment of acquittal is made due to insufficient evidence of guilt, detention, forensic custody, or confinement was imposed,” a claim for state compensation can be made.
FTX currently states that it can fully compensate, depending on the proportion of users’ assets operated by Steaker at the time that are “non-stablecoins,” which may be affected by low liquidation prices, and stablecoin assets should also be returned with interest.
FTX, Gemini, Genesis, Steaker