Gemini Earn users received $2.18 billion of crypto in kind

Gemini made approximately $2.18 billion of digital assets available in kind to about 232,000 Gemini Earn users on May 29, 2024, returning approximately 97% of the assets Genesis Global Capital owed them as of its November 16, 2022 suspension of redemptions.

The distribution was consequential because it restored access to crypto that had remained locked through Genesis’s bankruptcy and returned the assets by type and quantity rather than converting every claim into a fixed dollar payment. A customer owed one bitcoin, for example, was entitled to receive one bitcoin through the in-kind process.

Gemini said the $2.18 billion notional value used digital-asset prices observed at 10 a.m. Eastern on May 28, 2024. That figure was therefore a valuation snapshot, not cash paid, audited sale proceeds or the value necessarily realized by customers who later traded or withdrew their assets.

From an interest product to frozen accounts

Gemini launched Earn on February 1, 2021. Customers transferred digital assets to Genesis, an institutional crypto lender, in exchange for interest, while Gemini acted as their agent and deducted a fee from the interest payments.

New York’s Department of Financial Services later described the lending as unsecured. Its February 28, 2024 consent order said participation exceeded $2 billion by December 2021 and concluded that Gemini’s oversight of Genesis, risk management and customer representations were deficient. Those were regulatory findings resolved through the consent order, not findings newly announced on May 29.

Genesis halted Earn redemptions on November 16, 2022 and filed for Chapter 11 protection on January 19, 2023. The regulator said more than 200,000 customers still lacked access to approximately $1.742 billion of virtual currency as valued on February 23, 2024. Gemini and Reuters used the more specific figure of approximately 232,000 affected users when describing the May 29 distribution.

Why an in-kind recovery mattered

A dollar claim fixed near the bankruptcy date would not have conveyed subsequent appreciation in the underlying assets. The May 29 structure instead measured the initial distribution against the amounts and types of crypto owed on November 16, 2022. That made the recovery economically different from receiving only the earlier dollar value of the frozen balance.

Gemini characterized the $2.18 billion valuation as approximately $1 billion more than the assets’ value when withdrawals stopped. That comparison was the company’s point-to-point calculation using its May 28 valuation snapshot; the announcement did not disclose an asset-by-asset schedule, pricing venues, weighting method or the precise earlier valuation timestamp. It should not be read as a portfolio return because customers held different assets, received no access during the intervening period and had not necessarily liquidated the distribution.

The approximately 97% figure likewise referred to digital assets owed, not a universal dollar return for every account. Account composition, rounding, cash components and distribution mechanics could produce different customer-level results.

A regulated settlement shaped the recovery

The distribution followed an April 19 bankruptcy-court order approving a settlement among Gemini, Genesis and other creditors. Gemini recorded May 9 as the settlement’s effective date.

Separately, the February 28 New York consent order required Gemini to pursue full coin-for-coin restoration, contribute at least $40 million to the recovery within a specified period and submit updates to the regulator. It also imposed a $37 million civil penalty. Those obligations placed the recovery within an enforceable supervisory framework rather than leaving it solely as a voluntary company commitment.

As of May 29, the verified development was an initial distribution made available in customer accounts. It did not establish that every recipient had withdrawn the assets, that the remaining approximately 3% had been delivered or that all litigation concerning Earn and Genesis had concluded. Gemini told users on May 29 that the remaining balance was expected within 12 months.

Later context

On June 14, 2024, Gemini entered a separate settlement with New York’s attorney general covering the remaining approximately $50 million of assets. Gemini reported that the final approximately 3% became available on June 20. Those later developments confirm completion but were not knowable on May 29 and do not change the event-day limitation that the first distribution was approximately 97%.