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Gemini, the Winklevoss Twins crypto platform offering an exchange, custodian services, and – in partnership with Genesis – Earn services, has been in a bit of trouble ever since the latter filed for bankruptcy last January.
Possible Recovery Plan Waiting For Court Approval
Genesis, whose legal troubles stemmed partly from a loan to its parent company DCG that had not been repaid, has reportedly finally worked out a plan for repayment with said firm, allowing it to repay creditors – which included Gemini, given the nature of the custodial relationship between the two.
Currently, Genesis owes Gemini a total of $1.6 billion. As a result, Gemini was able to reach out to its users yesterday, offering them a possible exit from the platform, which the community would have to vote on.
“Earn users will soon receive an email with specific instructions on how to vote on the Plan and a link to the Genesis Solicitation Package, including the Disclosure Statement. The Bankruptcy Court found that the Disclosure Statement contains adequate information to enable Earn users to make an informed judgment about the Plan.”
Earn Update: Solicitation of the Genesis Plan of Reorganization (Plan) began today. Earn users were sent an email with specific instructions on how to vote on the Plan and a link to the Genesis Solicitation Package, including the Disclosure Statement.
The voting deadline is…
— GeminiTrustCo (@GeminiTrustCo) December 13, 2023
If the vote goes through, all Gemini users – including those with less than $250 invested, which originally were not due to be compensated – will receive an amount equal to the value of their crypto stored on the exchange on the 19th of January 2022, when Genesis first went belly-up.
However, the e-mail sent to creditors makes no notice of the elephant in the room – which was glaringly obvious to Gemini’s community, who are up in arms on X, voicing their anger at the proposal.
Many Plan To Vote No
The reason for the anger at the proposed repayment plan is that crypto prices were much lower in January 2022. At the time, one ETH was going for about $1,545, and one BTC was worth about $21k.
“How can any of your customers believe a single word you say when you have deceived and lied to us for WELL over a year (you know, like when you knew the Earn program was at risk of collapsing and you sent emails to customers that everything was a-okay when it was NOT a-okay). Maybe 61%? Maybe 100%? I’m supposed to vote on this? How is this far? You stole our money. Give it ALL back, every single dollar.”
The overwhelming majority of Gemini users present on X echo the sentiment above, with Bloomberg analyst Seyffart also chiming in to lay out the exact amount users may lose if the plan goes through.
This could be brutal. Granted seems to be worst case scenario but Gemini Earn users could be getting potentially just 61% of the value of their crypto from Jan 19, 2023. WOOF.
Even at 100% it stings based on current prices. Thats 61%-100% of:
Bitcoin $20,940Ethereum $1,545 https://t.co/A6u28U3dsi pic.twitter.com/5SKZnlRjr9
— James Seyffart (@JSeyff) December 14, 2023
Currently, one BTC is worth about $42.8k, and 1 ETH sells for $2,272, according to CoinGecko.
As a result, this payout would be far less than Gemini users would have earned by essentially doing nothing had they practiced self-custody of their assets. To add insult to injury, the proposal would not return any of the promised benefits generated for users keeping their crypto on Gemini’s platform.
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