Bullet Points:
• Gemini Earn customers may be facing up to a $485 million shortfall due to Genesis‘ bankruptcy filing.
• Genesis claims to have fulfilled its debt to Gemini by using proceeds from the private sale of Grayscale Bitcoin Trust (GBTC) shares that had been collateralized.
• Customers on the Gemini Earn platform are now in a difficult position due to the uncertain outcome of the bankruptcy proceedings.
Gemini Earn customers are facing an uncertain future due to the bankruptcy filing of Genesis, a cryptocurrency lending platform. According to the bankruptcy filing, Genesis owes its creditors a total of $3.5 billion, with the largest debt being owed to Gemini Earn, which is estimated to be around $769 million.
Gemini had been offering rewards to customers who lent cryptocurrency to the platform, which were then loaned to counterparties such as Genesis. In order to protect their customers, Gemini had set up a collateral agreement with Genesis back in August of 2022. This agreement was further extended in November of 2022, but shortly after this extension, Genesis froze withdrawals from its platform.
Genesis then informed Gemini that it had sold the collateralized GBTC shares at $9.20 per share, netting $284.3 million. However, this amount was still far below the total amount due to Gemini, meaning that customers on the Gemini Earn platform are now facing a potential $485 million shortfall.
The situation is made even more complicated by the fact that Genesis is now claiming that they have fulfilled their obligations to Gemini by using the proceeds of the private sale of GBTC shares. This has put the customers of Gemini Earn in a difficult position, as it is unclear how this will affect the outcome of the bankruptcy proceedings.
In the meantime, customers of Gemini Earn are left to wait and see what will happen as the case proceeds through the bankruptcy court. It remains to be seen if the customers will be made whole, or if they will be left with a massive shortfall.