Gemini Earn to begin returning customers’ cryptocurrency by the end of this month as court approves Genesis bankruptcy
Genesis, the bankrupt cryptocurrency lender that collapsed due to the Terra/luna ecosystem failure and the failure of Three Arrows Capital, had its bankruptcy plan approved by a U.S. court yesterday, and a judge ruled that Genesis owner digital currency The group’s (DCG) objection was dismissed.
U.S. Bankruptcy Judge Sean Lane ruled in favor of the plan to return about $3 billion in cash and assets to creditors, ignoring complaints from DCG, Genesis Crypto Creditors Ad Hoc Group and the U.S. Trustee.
DCG argued that the claims should be assessed in U.S. dollars when the company filed for bankruptcy in January 2023, circumventing nearly a year and a half of gains across the cryptocurrency sector.
In his ruling, Judge Lane condemned the complaint: “…DCG opposed the scheme in which it had no economic interest. The record herein is DCG’s recovery as an equity holder after payment of unsecured creditors in the debtor’s estate.”
The plan provides “a multi-step process for allocating assets to creditors by claim unit and valuing those assets for distribution purposes.” Simply put, creditors who owe cryptocurrencies are treated differently than creditors who owe U.S. dollars.
Judge Lane also noted, “…due to the rise in digital asset prices since the resolution was reached, creditors currently billed in U.S. dollars are expected to receive 100% of the loan balance.” “Post-petition interest payment)”, while creditors with claims on cryptocurrency will bear the shortfall in funds.
According to Bloomberg, DCG could appeal the ruling, but it is unclear what the legal justification for doing so would be given its overwhelming lack of assets.
Start receiving refunds through Gemini savings
Following the news, Winklevoss’s twin-owned exchange, Gemini, issued a statement calling the ruling a “welcome decision” and adding, “…this represents a global settlement between Gemini, Genesis and other creditors in the previously approved Genesis bankruptcy. It doesn’t affect the settlement.”
As part of the deal for Gemini Earn, creditors will begin receiving assets owed to them starting early this month, the company announced. Approximately 97% of the funds owed will initially be repaid, and payments will take the form of in-kind repayments, the company said. This means that customers who deposit one Bitcoin into Gemini Earn will receive that Bitcoin back, not its U.S. dollar value. Token for a specific date.
This differentiates Gemini’s bankruptcy response from FTX’s bankruptcy response, which under its current plan repays the dollar value it invoiced to its customers at the time FTX filed for bankruptcy.
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