In a move aimed at rectifying the fallout from the collapsed Earn program, Genesis and Gemini have initiated steps to compensate affected users. According to a statement released on March 19th by Gemini, Genesis has sought approval from a bankruptcy court for a settlement that will allocate funds to users impacted by the failed program.
The proposed settlement, outlined in a motion filed by Genesis, aims to distribute funds to users affected by the Earn program’s suspension, which occurred in November 2022. If approved by the bankruptcy court, the settlement will ensure that all Earn users receive 100% of their digital assets back, with approximately 97% expected in the near term. The remainder will be disbursed as recoveries are received from Digital Currency Group, Inc. (DCG).
This announcement marks the beginning of the necessary approval process by the Bankruptcy Court for the settlement to take effect. Users are reassured that no action is required on their part to benefit from the terms of the settlement.
Under the proposed settlement, users stand to regain their digital assets in full, along with any appreciation accrued since their participation in the Earn program. This means that if a user had lent one bitcoin into the Earn program, they will receive one bitcoin back, along with any appreciation in value.
The total value of assets to be returned under the settlement is estimated to exceed $2 billion at current prices, representing a significant increase from the value at the time of the program’s suspension.
Gemini, in support of the settlement, has committed to expedite the delivery of digital assets to users upon the settlement’s effectiveness. The initial distribution, comprising approximately 97% of owed digital assets as of the suspension date, is expected to occur within a few weeks of the settlement’s approval. The remaining balance will be credited as recoveries are obtained from DCG.
As part of the settlement, Gemini has pledged $50 million to contribute to users’ recoveries, with $40 million referenced in a previous update from February 28, 2024.
In addition to addressing user compensation, the settlement also resolves legal proceedings related to the Earn program, including adversary proceedings and preference claims against users. Genesis has waived all preference claims and causes of action against Earn users as part of the settlement terms.
The Earn program, initially launched in partnership between Gemini and Genesis in February 2021, offered users a lending product providing returns on crypto deposits. However, withdrawals were suspended in November 2022 amid a broader lending crisis and the collapse of FTX. Earn was subsequently discontinued in January 2023, leading to Genesis filing for partial bankruptcy.
Notably, in January 2023, the US Securities and Exchange Commission filed charges against Gemini and Genesis, which have since partially concluded with Genesis agreeing to pay a $21 million civil penalty.
Source: https://azcoinnews.com/genesis-and-gemini-take-steps-to-compensate-users-affected-by-failed-earn-program.html