- Gemini’s offer to Earn customers has been described as potentially “brutal” by ETF expert James Seyffart
- Gemini Earn was forced to freeze operations when its partner Genesis went bankrupt in January, trapping $1.6 billion in total
- The company will only pay out at crypto prices from January this year, when Bitcoin was $21,000
A proposal made by Gemini to its Earn customers has been described as potentially “brutal” after it was revealed that they may only get back around 60% of their holdings at January 2023 prices. The emphatic analysis came from ETF expert James Seyffart after Genesis gave users the chance to vote on its latest Genesis Solicitation Package, with the best case scenario being that customers will receive the cash value of all their holdings as of January 2023. Gemini Earn hit the skids last year when Genesis, the platform it used for its interest facility, unexpectedly shuttered after falling into bankruptcy.
Payouts Would be Set to January 2023 Valuations
Gemini has been trying all year to get back the $1.6 billion Genesis owes it, taking Genesis’ parent company, Digital Currency Group, to court as a result. Having failed to achieve this, Gemini has looked within to try and work out how to settle its users’ claims, culminating in a ‘Genesis Plan of Reorganization (Plan)’ being sent to customers to vote on yesterday.
The plan has not been well received, however, with Seyffart among those to point out that the very best that customers can hope for is the cash value of their holdings at the time that Genesis went bankrupt, which was January 19, 2023. On that day, Bitcoin’s value was around $21,000, more than 50% lower than its value today. The worst case scenario, however, is that they only receive 61% of that valuation, giving a Bitcoin price of $12,800:
Some users pointed out, however, that all might not be lost, and that a crypto payout may be on the cards:
James, it clearly says right below your highlight, that earn users may receive from Gemini their pro rata share of the value of certain collateral, including post- petition appreciation in the value – which is what the asset is worth today.
— Sam D. Kim (@Drsammykim) December 15, 2023
The situation is reminiscent of MtGox, where users faced a fraction of the value of the bitcoin still held by the company when cash payments were on the table. Fortunately, the creditors were able to get the Japanese bankruptcy court to agree to take the company into civil rehabilitation, which brought with it the option of crypto payments.
