Clients whose money was frozen in the now-defunct crypto loan scheme of cryptocurrency exchange Gemini will soon begin to receive their money back. (Photo : André François McKenzie / Unsplash)
Clients whose money was frozen in the now-defunct crypto loan scheme of cryptocurrency exchange Gemini will soon begin to receive their money back.
Owned by internet billionaires Cameron and Tyler Winklevoss, the business declared on Wednesday that it will give back $2.18 billion of its digital assets to participants in the Earn program, for which withdrawals were suspended in November 2022.
Gemini has announced that initial distributions for its Earn program are now available in customer accounts. Approximately 97% of the digital assets owed to customers by Genesis, as of the suspension date on November 16, 2022, have been distributed.
This follows a recent settlement reached with Genesis and other creditors in the Genesis bankruptcy case, ensuring that all Earn users will receive 100% of their digital assets back in kind.
Full Return of Digital Assets and Recovery Milestone for Gemini Earn Users
The announcement clarifies that if a customer lent one bitcoin in the Earn program, they will receive one bitcoin back. Additionally, any increase in the value of the assets since they were lent into the Earn program will also be returned.
At $2.18 billion, the money payout marks a 232% recovery for consumers since Gemini banned withdrawals for participants of its Earn program 18 months ago.
First established in 2021, Earn enabled clients to obtain large dividends on their coins by keeping them in Gemini's program. Gemini then lent customers' crypto to institutional borrowers through Genesis Global Capital, its lending partner of choice.
In November 2022, Genesis Global Capital suspended new loan originations and redemptions, causing Gemini to halt withdrawals from its Earn program. Genesis filed for Chapter 11 bankruptcy protection last January in Manhattan federal court.
Last Monday, New York Attorney General Letitia James announced a $2 billion deal with Genesis to reimburse deceived investors.
The return of $2.18 billion to investors from Gemini's Earn program is likely to have significant economic implications for both individual users and the broader crypto market.
Firstly, the influx of funds into the hands of investors could positively impact their financial situations. Many individuals who had their assets frozen may now experience improved liquidity, allowing them to pay off debts, invest in other opportunities, or increase their savings. This sudden financial boost could also lead to increased consumer spending, benefiting various sectors of the economy. For some, the return of these assets may provide much-needed financial relief, especially in uncertain economic times.
On a larger scale, the return of such a substantial sum of money is likely to influence the overall crypto market. The injection of $2.18 billion can lead to increased trading activity as investors may choose to reinvest their funds into other cryptocurrencies or crypto-related assets. This surge in activity could drive up prices, at least in the short term, and potentially stabilize or increase investor confidence in the market. The positive resolution of this issue may also attract new investors who see the crypto market as more secure and trustworthy.
Moreover, the successful return of assets could serve as a case study for handling similar situations in the future, setting a precedent for how crypto companies manage customer funds and respond to crises. This may enhance the credibility of the industry and encourage more robust regulatory frameworks aimed at protecting investors.
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