A huge pending issue seems to be coming to a happy conclusion in the cryptocurrency space. Users of the Gemini exchange, who followed the Earn program that allowed them to deposit their coins and receive annual returns of between 0.45% and 8%, a service provided by the bankrupt Genesis Global Capital, are now one step closer to recovering their money.
In a deal announced today between Gemini and Digital Currency Group (DCG), the parent company of Genesis, announced yesterday in bankruptcy court, Gemini will contribute up to $100 million to Earn users.
According to a press release the terms of the deal include the sale of Genesis Global Trading. In addition, DCG will swap $1.1 billion in debt to Genesis that matured in 2032 for convertible preferred stock and will refinance existing term loans in two tranches, paying creditors a total of $500 million.
Genesis’ lawyers said they are seeking a quick resolution of the disputes with its creditors and expressed optimism that the company will exit the Chapter 11 process by the end of May.
According to leaked reports, it is predicted that Genesis’ creditors will eventually receive 80% of the money they had deposited.
Recall that Genesis had temporarily suspended acquisitions, withdrawals and the issuance of new loans in November 2022, leaving Gemini users exposed. Which led the exchange’s founders, twin Winklevoss brothers, to take legal action against DCG founder Barry Silbert, demanding repayment of the $900 million loan.
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Cameron Winklevoss directly accused Barry Silbert, charging that the 340,000 users of the exchange who were involved in the staking have had their funds unfairly frozen.
He said that their money has become just digital numbers, whereas they are real people with real needs. And now they are tired of delays, they are scared and deserve better treatment.
As we have mentioned in previous articles, the case of Genesis Trading is far from simple.
Genesis is one of the largest cryptocurrency lending platforms, targeting institutional and highly affluent individuals.
The parent company, Digital Currency Group, in addition to Genesis, has under its umbrella among others Grayscale Investments is the company behind Grayscale Bitcoin Trust (GBTC). The oldest and largest Bitcoin fund traded on Wall Street, which holds 633,600 coins.
According to brothers Cameron and Tyler Winklevoss, the problem of Earn users does not affect other Gemini products and services. Depositors have no reason to worry as there is full coverage on the money they have entrusted to them.
That is why they have not frozen withdrawals. Moreover, they claim that they hold all legal licenses from the New York authorities and are fully compliant with the rules.
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