Fallen cryptocurrency lender Gemini is reportedly set to begin returning billions in frozen customer funds.
The firm, owned by billionaire twin brothers Cameron and Tyler Winklevoss, announced Wednesday that it will return $2.18 billion of its digital assets to customers of the Earn program, CNBC reported, citing an email to customers.
“Today, we are pleased to let you know that initial Earn distributions — approximately 97% of the digital assets owed to you by Genesis as of the suspension date (November 16, 2022) — are now available in your Gemini account,” the email reads.
“This follows our previous announcement that we reached a settlement with Genesis and other creditors in the Genesis Bankruptcy, which will result in all Earn users receiving 100% of their digital assets back in kind.”
The message adds: “This means that if you lent one bitcoin in the Earn program, you will receive one bitcoin back. And it means that you will receive any and all increase in the value of your assets since you lent them into the Earn program.”
According to CNBC, the $2.18 figure represents a 232% recovery for users since the company suspended withdrawals for customers of its Earn program 18 months ago.
Introduced in 2021, Earn allows customers to enjoy yields on their cryptocurrencies by storing them with Gemini, which then lends that crypto to institutional borrowers through lending partner Genesis Global Capital.
Genesis paused new loan originations and redemptions in November 2022, which forced Gemini to halt withdrawals from its Earn program. Genesis filed for bankruptcy protection last year, with the state of New York recently announcing a $2 billion settlement with Genesis to repay defrauded investors.
The news comes as the crypto sector is at something of a crossroads, as PYMNTS wrote earlier this month upon the occasion of two news events: the jailing of one-time crypto wunderkind Sam Bankman-Fried, and the passage of the Financial Innovation and Technology for the 21st Century (FIT21) Act, the first step in establishing a comprehensive crypto framework.
The bill, which faces an uncertain future in the Senate, “establishes a process to permit the secondary market trading of digital commodities if they were initially offered as part of an investment contract.”
In addition, it “imposes comprehensive customer disclosure, asset safeguarding, and operational requirements on all entities required to be registered with the CFTC and/or the SEC.”
Still, as PYMNTS CEO Karen Webster wrote years ago, “bitcoin was an interesting, even fascinating, innovation, but not the salvation of our global financial system — not even close.”
“With political momentum seemingly behind the industry, now will be the time for the crypto sector to prove its worth — or risk revealing to the world that this whole time the emperor truly had no clothes,” PYMNTs wrote.
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