Genesis, a cryptocurrency lending operation, along with its parent company Digital Currency Group (DCG), has announced a proposed compensation plan that could potentially pay back over 230,000 retail creditors who participated in Gemini’s Earn program. This plan aims to provide these creditors with a significant portion of their lost funds, and the final decision on this proposal would be put to a vote later this year.
Earn was made available to Gemini cryptocurrency exchange users, with Genesis providing the financial infrastructure that powered the program. When Genesis was obliged to suspend withdrawals and eventually file for bankruptcy, this created an issue for Gemini customers.
DCG has proposed the creditor agreement for Genesis’s bankruptcy that could allow Gemini Earn users to recover all of their cryptos. The filing cited, “Gemini Earn users are estimated to recover approximately 95-110% of their claims.”
DCG’s Genesis owes around $1.1 billion to Gemini Earn customers, who make up almost 99% of all claimants, according to DCG representatives. As per DCG bankers, the Earn customers’ claim is being calculated based on what would be refunded from the Genesis bankruptcy estate.
Depending on how the bankruptcy claim is calculated, the Earn customers are estimated to get between $440 million and $765 million of a claim. That claim is estimated to receive distributions of $400 million to $535 million, plus Gemini user collateral of more than 30 million shares of the Grayscale Bitcoin Trust (GBTC), valued at around $607 million. So, they’re looking at total recoveries of a billion dollars or more, which is roughly their total claim.
Meanwhile, the Gemini exchange’s owners, Cameron and Tyler Winklevoss, have engaged in a heated public battle with DCG the founder Barry Silbert. They filed a lawsuit on Tuesday which takes aim at Gemini, claiming that the corporation was not contributing financially to making its own consumers whole during the bankruptcy.
Genesis made a statement referring to the previous promise made by Gemini in February to contribute to a potential shortfall saying:
If Gemini agrees to provide $100 million to Gemini Earn users under the Proposed Agreement, as it previously did, or to distribute even a small portion of the Gemini User Collateral to Gemini Earn users, there would be little doubt Gemini Earn users would receive a full recovery.
The remaining balance of the settlement after the GBTC collateral & the claim could be met by assets held by Genesis.These payments might be made int he form of cash, stablecoins, and payments made to the firm by DCG as part of longer termed notes.
