According to Gemini co-founder Cameron Winklevoss in a tweet, a creditor committee that includes Gemini has offered Genesis and Digital Currency Group a plan to “provide a path for the recovery of assets.”
At the height of the bull market in February 2021, Gemini teamed up with Genesis to launch Gemini Earn, which provided customers with up to 7.4% interest on their cryptocurrency deposits. Given the market turbulence brought on by FTX in mid-November, Genesis stopped allowing withdrawals, locking Gemini Earn funds in the process.
Amanda Cowie, vice president of communications and marketing at DCG, at the time said,
“This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion……This decision impacts the lending business at Genesis and does not affect Genesis’s trading or custody businesses. Importantly, this decision has no impact on the business operations of DCG and our other wholly owned subsidiaries.”
Genesis Reportedly Owes Gemini $900M
According to a person familiar with the situation, customers who have money locked up on the trading and lending site Genesis and who have sought legal counsel in the matter are currently responsible for about $1.8 billion in loans. And it appears that number will keep rising.
According to a recent Financial Times investigation, a group of consumers utilizing Genesis-affiliated cryptocurrency exchange Gemini’s Earn program were due $900 million when the loan division of Genesis stopped allowing customer withdrawals on November 16.
Proskauer Rose is representing the second set of unrelated Genesis creditors, whose loans total $900 million as well, a second source informed the media.
The Proskauer group brings the total to $1.8 billion, and a third ad hoc group, which is being represented by Kirkland & Ellis, the legal team for insolvent cryptocurrency companies Celsius Network and Voyager Digital, is expected to add more, the second source said. It is unknown how much money this third group owes in loans. The second person indicated that the law firm Latham & Watkins is also representing the Gemini customers group.
In a letter to investors on Nov. 23, Genesis said,
“It had begun discussions with potential investors and our largest creditors and borrowers, including Gemini and DCG [Digital Currency Group], to agree on a solution that shores up our lending business’ overall liquidity and addresses clients’ needs.”