Gemini Earn users might get just 61% of the value of their crypto holdings as of Jan. 19, 2023, according to a reorganization plan from defunct crypto lender Genesis.
In a Dec. 13 update on the Gemini’s website, the exchange revealed that Earn users would get an email outlining the proposed plan, saying:
“Overall, Genesis estimates that Earn users could recover from Genesis anywhere between 61% and 100% of the value of their pending Earn balance as of January 19, 2023 (the date Genesis filed for bankruptcy).”
As of Jan. 19, Bitcoin and Ethereum traded for $20,940 and $1,545, respectively. Since then, the value of these flagship assets has shot to more than $40,000 and $2,000, respectively, following the prevailing bullish sentiment that flowed into the crypto market.
Negative reaction trail plan.
The disclosed plan has sparked widespread outrage among Gemini Earn users, who criticize various aspects of it.
Bloomberg ETF analyst James Seyffart labeled the plan as “brutal,” saying:
“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. Even at 100% it stings based on current prices.”
Some unconfirmed users highlighted the complexity of the 374-page document, suggesting that many might require assistance to comprehend it.
Another pointed out that the promised 61% could be misleading, as calculations may suggest an actual return of only 30.5% of assets due to previous aspects of the plan and the designated petition date. The calculation appears to be based on the price of Bitcoin at the petition date compared to current prices. Were redemptions to be paid in fiat, users may receive significantly less than the current dollar amount of their assets. However, the update suggests that users will receive the same digital assets they loaned to Genesis.
“Earn users’ recoveries will be in the form of the digital assets loaned to Genesis to the greatest extent possible.”
What next for Gemini Earn users?
Gemini’s website update shows Earn users must vote on the plan before Jan. 10, 2024.
If this plan is approved, Gemini said there would be an initial distribution of Genesis’s assets to Earn users. At the same time, the exchange said it would continue to pursue legal actions against Genesis to recover $1.6 billion for the benefit of Earn users.
However, if the plan is rejected, Gemini said Genesis would be forced to explore alternative options, including developing a new strategy that could delay distributions by several months.
