Gemini exchange recently made an announcement stating that users of its now-defunct Earn product have received a staggering $2.18 billion of their digital assets. This amount represents a significant portion of the total digital assets owed to Earn users, showing a remarkable recovery since the demise of Genesis, a crypto lender that ceased withdrawals in November 2022. The assets were returned in kind, meaning that users received the same assets they had initially lent, resulting in a 232% recovery for Earn users. The value of digital assets has increased substantially over the past two years, contributing to this impressive recovery.
Genesis Bankruptcy and Gemini’s Response
Gemini’s founders, Cameron and Tyler Winklevoss, emphasized the significance of this recovery, calling it unparalleled in the realm of crypto bankruptcies. They also mentioned that a settlement in principle has been reached with Genesis and other creditors, ensuring that all Earn users will receive 100% of their digital assets back in kind. The bankruptcy of Genesis was attributed to financial fraud and a lack of regulatory clarity in the US, rather than issues within the crypto industry. Gemini reaffirmed its commitment to advocating for better regulatory measures to support innovation and consumer protection in the industry. The company stated that it will continue to push for clear rules and guidance to secure the future of the industry.
Potential Impact of In-Kind Distributions
Despite the positive news of the recovery for Earn users, industry analysts have raised concerns about the potential effects of in-kind distributions. They warn that such distributions could lead to significant selling pressure as creditors decide to liquidate their assets. Evan Cohen, a thesis investor, pointed out that a large number of sellers are now prepared to unload their previously locked-up assets, which could result in increased trading activity. This surge in trading may have repercussions on the prices of popular cryptocurrencies like Bitcoin and Ethereum.
The recovery experienced by Earn users on the Gemini exchange is truly remarkable and sets a precedent for the crypto industry. While the road ahead may pose challenges, especially with regards to potential selling pressure from in-kind distributions, the commitment of companies like Gemini to advocate for better regulations provides hope for a brighter future. The industry will need to navigate through these challenges and continue to innovate while ensuring consumer protection remains a top priority.
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