- Genesis returns a whopping $3 billion to creditors and investors
- The troubled crypto lender filed for bankruptcy in January last year.
A bankruptcy judge has approved cryptocurrency finance company Genesis Global's plan to return about $3 billion to creditors and investors, including thousands of people, who New York regulators say were defrauded by the company.
The plan and settlement approved by Judge Sean H. Lane on Friday includes up to $2 billion to settle a lawsuit brought by New York State Attorney General Letitia James, with the company known as “Gemini Earn.” The lawsuit alleges that the company misled investors about the risks of pouring money into a company program that would allow the company to do so. .
“This historic settlement is a major step toward ensuring justice for the victims who invested in Genesis,” James said in a statement Monday. “We are once again witnessing the real-world consequences and harmful losses that can result from a lack of oversight and regulation in the crypto industry.”
“We are once again witnessing the real-world consequences and harmful losses that can result from a lack of oversight and regulation in the crypto industry.”
Creditors who filed claims in U.S. dollars will receive 100% of their loan balances from the company, which filed for bankruptcy last year. According to this decision, those with claims in virtual currency will be left with some shortfall.
James' office said the proposed settlement includes a victims' fund for Genesis' creditors to recoup some of their losses.
“We look forward to implementing our plan and making distributions as quickly as possible,” Genesis Interim CEO Deraa Islam said in a statement Friday.
Genesis was a partner in Gemini Earn, an investment program through New York-based cryptocurrency exchange Gemini.
The Winklevoss twins, Cameron and Tyler, founded Gemini in 2014 and helped pioneer the February 2021 Earnings program.
Genesis received loan funds from Gemini while the Earn program was still operational. Gemini Earn customers were looking for funds when Genesis went bankrupt in January 2023 after the collapse of FTX and Three Arrows Capital.
The Winklevoss twins say Genesis owes more than $900 million to about 340,000 Gemini Earn investors.
On January 10, 2023, Cameron Winklevoss said Barry Silbert should be fired as CEO of Genesis parent company Digital Currency Group.
More than a year later, in March 2024, the two companies reached a settlement agreement in which Genesys released approximately $2 billion worth of cryptocurrencies to approximately 232,000 Gemini customers whose assets were frozen prior to Genesis' bankruptcy. It was agreed that it would be returned.
The latest developments in the Genesis bankruptcy proceedings come as bankrupt cryptocurrency exchange FTX announced that customers will receive 100 percent of their refunds and interest.
FTX founder Sam Bankman Freed was sentenced to 25 years in prison in March for stealing approximately $11 billion from his clients.
