Gemini will begin refunding customers by the end of May 2024
Date: 2024-05-20 Author: Henry Casey Categories: BUSINESS
A US bankruptcy court has approved a liquidation plan for crypto lender Genesis, a key step in returning funds to customers. On May 17, 2024, Judge Sean Lane approved Genesis' Chapter 11 bankruptcy plan, which will allow the company to begin paying creditors whose funds have been frozen on the platform since November 2022 following the collapse of companies such as FTX and Three Arrows Capital.
Return of Funds to Earn Program Participants
The Gemini exchange announced that the first payments to Earn program participants will begin by the end of May 2024. According to court documents, about $3 billion in cash and crypto assets will be returned to creditors. This decision was made possible due to the dismissal of a lawsuit filed by Digital Currency Group (DCG) and the special interest group Genesis Crypto Creditors.
Dismissal of DCG Claim
DCG argued that all claims should be valued in US dollars at the time of the company's bankruptcy filing in January 2023, when Bitcoin was trading near $24,000. At the time of publication of the news, the price of Bitcoin exceeds $67,000. The judge rejected this claim, approving the bankruptcy plan, involving a multi-step process of assessing and distributing assets to creditors at par for their claims.
DCG Position and Possibility of Appeal
As a Genesis shareholder, DCG is last in line to pay off its debt under Chapter 11. According to Bloomberg, DCG may appeal the court's decision, which could add further delays to the process of paying creditors.
Gemini Statement
Gemini released a statement after the plan was approved, calling the court's ruling a "long-awaited decision." Exchange officials noted that the decision does not affect the global settlement between Gemini and other creditors in the previously approved Genesis bankruptcy case.
Payment Process and Terms
As part of the agreement, Gemini Earn creditors will begin receiving the first payments towards the end of May 2024. The company initially plans to repay approximately 97% of its debt. All payments will be made "in kind", meaning that a customer who deposits 1 BTC into the Earn program will receive back one Bitcoin, not its dollar value on a specific date.
Comparison with FTX
Gemini's approach differs from that of crypto exchange FTX, which plans to reimburse clients for the dollar value of assets at the time of the bankruptcy filing. As a reminder, FTX has extended the deadline for customers to file claims until the end of July, up from the original deadline of May 15, 2024.
The approval of Genesis' bankruptcy plan and the start of payments to Gemini customers by the end of May 2024 marks an important milestone in restoring confidence in the cryptocurrency industry. Successful execution of this plan will help return significant funds to impacted customers and strengthen Gemini's position in the marketplace.
