Genesis Global Capital (GGC) is a cryptocurrency brokerage firm that caters to institutional investors. Founded in 2013 as a subsidiary of Digital Currency Group (DCG), GGC facilitates over-the-counter (OTC) trades for large digital asset transactions and offers institutional lending services.
Genesis Proposal for Gemini Resolution
The saga surrounding frozen Gemini Earn accounts appears to be nearing a resolution. On March 19, 2024, Genesis presented a proposal to the Bankruptcy Court seeking approval for a “settlement in principle.” This proposal, announced on February 28, 2024, outlines a comprehensive resolution with Genesis that could see the return of digital currencies worth approximately $2 billion to around 232,000 Gemini customers.
The proposed agreement seeks to address the consequences stemming from the halting of withdrawals on the Earn platform, which rendered numerous users’ assets inaccessible in the wake of the downfall of major crypto entities FTX and Alameda Research.
Bankruptcy Agreement Approval: Earn Users’ Recovery
If the Bankruptcy Court approves the agreement on April 16, 2024, Earn users can regain access to their digital assets. Within a few weeks of the Court’s approval, users would initially recover approximately 97% of their digital assets owed as of November 16, 2022. The remaining assets will be credited as they are recovered from DCG. Furthermore, Gemini is contributing $50 million to enhance the recoveries for Earn users.
In a filing endorsing the settlement, Gemini stated, “Gemini is dedicated to the success of the Settlement Agreement … the Settlement Agreement presents the best and only path to a near-term coin-for-coin recovery for the Gemini Lenders.”
Genesis Collapse: Fallout from Gemini Partnership
Genesis’s predicament originated in 2020 when Gemini introduced the Earn product, allowing customers to generate interest in their digital asset holdings. This initiative involved a collaboration with Genesis, an investment firm responsible for managing customer funds. The relationship encountered challenges in November 2022 when the financial collapse of FTX and Alameda Research strained Genesis. As a result, Genesis failed to fulfil customer withdrawal requests, leading to its bankruptcy filing in January 2023.
Resolving Legal Conflicts
The settlement proposal intends to address the financial detriment experienced by impacted users while concurrently resolving legal conflicts between Genesis and Gemini. Both entities have encountered legal proceedings, including allegations from the SEC of offering unregistered securities via the Earn product, and a recent settlement with the NYDFS.
However, the SEC announced a partial settlement, wherein Genesis agreed to pay a $21 million civil penalty, marking a significant step towards resolving the regulatory issues surrounding the Gemini Earn program.
Crypto Giants Genesis & Gemini Rebound
As the turmoil from the Earn Program settles, Genesis and Gemini are poised to navigate a path toward recovery and redemption. The proposed settlement, if approved, promises to reimburse affected users and paves the way for rebuilding trust and restoring faith in the crypto lending ecosystem.
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