In an email on Wednesday, U.S. cryptocurrency exchange Gemini announced that it has returned $2.18 billion to customers whose funds were locked in the company’s ‘Earn’ program.
Gemini, founded in 2014 by billionaire twins Cameron and Tyler Winklevoss, took the unusual step of compensating each customers’ digital assets 1:1, meaning if a customer had one bitcoin in the Earn program, they received one bitcoin back.
Given that cryptocurrency values have risen steeply since the program was halted in November 2022, customers benefited significantly, with investments accruing 232% in value.
Cameron Winklevoss said in a statement that the company is “thrilled” that it has been able to “achieve” the $2.18 billion recovery for its customers. He added that Gemini recognizes the hardship this lengthy process has caused and that it appreciates its customers’ “continued patience and support.”
Gemini created the Earn program in 2021, allowing customers to loan their crypto to Genesis Global Capital for up to 7.4% APY. When Genesis faced headwinds due to the falls of Three Arrows Capital (3AC) and FTX, it paused new loan redemptions and originations, forcing Gemini to stop customer withdrawals from the Earn program.
In January 2023, Genesis filed for Chapter 11 bankruptcy protection in Manhattan. Last week, NY District Attorney Letitia James announced a $2 billion settlement with the company to pay “defrauded” investors back, with Gemini Earn customers first in line. She noted in a statement that when investors lose money due to “fraud or manipulation,” they deserve to be made whole.
97% of locked funds were made available on Wednesday, with the additional 3% to be made available in the next 12 months.
Hope for Defunct Crypto Exchange/Hedge Fund Customers
The bankruptcies of FTX and 3AC did more than shock the crypto world: They put the money of over one million customers at risk. Fortunately, due to the work of many people, some of that money is poised to be returned. At Rarity Sniper, we have covered a few stories about those two exchanges and the bankruptcy proceedings. Here are some of the headlines:
- FTX Transfers NFTs to Bankruptcy Estate Wallet for Sale
- Bankrupt 3AC Sells $2.5 Million in NFTs at Sotheby’s
- Sotheby’s to Auction NFTs from 3AC’s Seized Collection
- Sotheby’s to Auction 3AC’s ’Starry Night’ Digital Art Collection
FTX customers are poised to be made whole, although it comes at a cost: Their money will be returned, but at November 2022 valuations, not at the value we now see in the cryptocurrency market. That represents a big loss and shows the ingenuity of Gemini to return digital assets 1:1 to their customers.
Some large companies have already received some money back from 3AC, although the story has not been as high-profile as FTX. Still, it shows that not all hope is lost in situations where big crypto companies go bankrupt — and take their customer or investor funds with them.
Rarity Sniper will keep an eye on the Gemini story and update this article if needed.