Gemini has announced a proposed settlement with Genesis and other creditors in the Genesis bankruptcy case that could allow Gemini Earn users to recover their digital assets in full. If approved by the bankruptcy court, the plan would return more than $1.8 billion in crypto assets, marking a major development for users whose funds were locked in the lending program.
In-kind repayment is the key element
The most important feature of the proposed resolution is the promise of coin-for-coin repayment. Instead of receiving a cash-equivalent distribution based on lower historical prices, Earn users would get back the same type of digital assets they originally lent. Gemini said this structure also captures the appreciation in those assets since the lending period, adding roughly $700 million in value compared with their worth when withdrawals were halted in November 2022.
Under the current timeline, users are expected to receive about 97% of their assets within approximately two months after court approval, with the remaining balance to be distributed within one year. Gemini also said it has spent the past 15 months negotiating for customer recovery and contributed $40 million to support the effort.
Background of the Earn collapse
The dispute stems from Gemini’s relationship with Genesis Global Capital, which acted as the backend lending partner for the Earn program. That arrangement unraveled as Genesis faced mounting financial stress and eventually filed for bankruptcy in January 2023. Since then, Gemini, Genesis, and regulators have been working through legal and financial issues tied to customer asset recovery.
Gemini said the proposed settlement was also supported by the New York Department of Financial Services. Bloomberg ETF analyst James Seyffart highlighted the significance of the in-kind recovery model, noting that reclaiming assets such as bitcoin and ether at current market levels would be far more favorable than receiving repayment based on depressed 2022 prices.
While the agreement still requires court approval, the proposal stands out as one of the more favorable recovery outcomes seen in a major crypto bankruptcy case. Final distributions, however, will depend on judicial approval and the execution of the settlement plan.