Gemini exchange agrees to commit up to $100 million in cash for its customers as part of a restructuring deal and recovery plan with the now-bankrupt Genesis Global Capital and parent firm Digital Currency Group.
In a court hearing held on 6th Feb., Gemini announced the agreement in principle with Genesis DCG and other creditors on a plan that provides a path for Earn users to recover their assets.
As part of this initiative, the Winklevoss twins-led trading firm, will donate up to an additional $100 million to Earn users.
It needs to be recalled that the trading firms were involved in a bitter public spat over $900 million in customer assets where both sides accused each other of perpetuating fraudulent activity, misleading accounting, and misguided public statements.
The contentious relationship had its origin way back in Dec 2020 when the two firms forged a deal to give the latter’s customers the option of lending their cryptocurrency to Genesis.
As part of the agreement, Genesis would agree to pay interest on the loans being issued.
Then in February 2021, both firms introduced the Gemini Earn program to retail investors, who then “tendered their crypto to Genesis.”
The agreement also entailed that Gemini would act as the facilitator and earn a 4.29% agent fee, and Genesis would then “exercise discretion in how to use investors’ crypto assets to generate revenue and pay interest to the latter’s Earn investors.”
Gemini Customers Filed Class Action Suits
For months, Gemini customers loaned money to Genesis for placement across various crypto trading desks. Following the FTX crash, Genesis filed for bankruptcy and was forced to temporarily shutter its operations, as well.
Withdrawals on Earn have been temporarily suspended for almost three months. Naturally, the 340k retail customers of Gemini are upset, and some of them have joined hands to file class actions against the two firms.
Even the SEC has filed a lawsuit against the two firms alleging the sale of unregistered securities, TronWeekly reported the other day.
With the latest deal hoping to bring relief for the investors, Gemini released the following statement:
This plan is a critical step forward toward a substantial recovery of assets for all Genesis creditors. It demonstrates Gemini’s continued commitment to helping Earn users achieve a full recovery.
The broader details of the restructuring plan were announced in Manhattan bankruptcy court.