Crypto exchange Gemini and lending platform Genesis reached an agreement over the exchange’s Earn program. It can be recalled that the founders of the two firms were embroiled in an ugly fight after Genesis halted withdrawals in November 2022. Gemini founder Cameron Winklevoss and affected users threatened to file a lawsuit as a backlash against the crypto lending firm’s action.
Genesis filed for chapter 11 bankruptcy on Jan. 19 becoming the latest addition to the growing list of crypto companies that suffered a fatal blow after the FTX crash. The amicable settlement between the two companies will somehow ease the pain that embattled users have experienced amid one of the most devastating crypto winters. The 340,000 affected Gemini Earn users will soon have a chance to recover their funds.
Gemini co-founder Cameron Winklevoss made the announcement on Twitter. He stated:
“Today, @Gemini reached an agreement in principle with Genesis Global Capital, LLC (Genesis), @DCGco, and other creditors on a plan that provides a path for Earn users to recover their assets. This agreement was announced in Bankruptcy Court today.”
In a press release, DCG, the parent company of lending firm Genesis Global Capital was ordered by the bankruptcy court to exchange its existing $1.1 billion note due in 2032 for convertible preferred stock, refinance its existing 2023 term loans in two tranches made payable to creditors in the aggregate total value of approximately $500 million. Gemini for its part has agreed to contribute an additional $100 million for Earn users.
All’s well that ends well hopefully for the two companies and their users. Unfortunately, seems like the two former partners are still not off the hook yet. The US Fed and US SEC are now investigating the Gemini Earn program for allegedly violating securities laws. In a press release US SEC Chair Gary Gensler stated:
“We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors.”
Gensler stated that crypto lending platforms need to comply with securities laws. He further added that the action taken by the regulatory bodies is aimed at protecting investors and promoting market trust. He also reiterated that compliance is not an option but a must as dictated by the law.
Ripple and its digital asset XRP have also come under fire after the US SEC filed a lawsuit alleging that the crypto-asset is a “security” and should be governed by securities laws but the case remains unresolved up to this day. Now we are seeing yet another similar charge against Gemini’s Earn program. We shall see in the coming days how the recent events will unfold.
