Gemini Earn Updates: What to Do if Your Crypto is Frozen
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There are some signs of hope emerging for crypto owners who have deposits locked in the Gemini Earn program.
The program, which at one point paid rewards upward of 8% to customers who agree to lend out certain cryptocurrencies, has been frozen for months amid industry turmoil.
But on Feb 6., the Gemini crypto exchange and the bankrupt vendor that operates its Earn program — Genesis Global Capital — said they had come to an agreement that paves the way for customers to recover their funds.
Are you affected?
Gemini Earn is an opt-in program, so if you’re a Gemini customer but haven’t moved your crypto into Gemini Earn, you shouldn't be directly affected by these issues. Gemini, co-founded by twins Cameron and Tyler Winklevoss, has emphasized that other assets held on its platform remain available for withdrawal.
Nonetheless, assets in Gemini Earn were supposed to be available within five business days of customer request. Instead, they've been inaccessible since November of 2022.
What to do if you have money on Gemini Earn
If you do have funds on Gemini Earn, you may be waiting awhile for specifics on how to get your money back — even in light of the latest developments.
In a message to customers, Gemini urged customers to stand by for more information on "how to participate in the recovery."
One step customers can take right away is to put together detailed records of how much crypto they have, what it's worth and exactly where it's being held. This information can be useful in working out potential disputes.
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In the meantime, the exchange says it will be updating customers about its progress.
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What's happening with Gemini Earn?
Gemini Earn had been giving funds to Genesis as a way to generate the program's promised returns.
But in November, Genesis said it could no longer return customer funds, citing “abnormal” volumes of redemption requests after the collapse of the FTX exchange.
FTX and its U.S. branch, FTX.US, filed for Chapter 11 bankruptcy after a spike in withdrawals amid reports that the company had used customer funds on risky investments that left it in a deep financial hole.
And in January of 2023, Genesis filed for bankruptcy as well.
As part of the bankruptcy process, Genesis now says it has hammered out a deal with creditors including Gemini. Overall, Genesis said creditors have claimed it owes more than $2 billion. In a news release, the company said it had arranged to free up hundreds of millions of dollars to take on some of those debts.
In addition, Gemini says it "will be contributing up to $100 million more for Earn users as part of the plan, further demonstrating Gemini’s continued commitment to helping Earn users achieve a full recovery."
How did we get here?
In November 2022, the Winklevoss twins wrote a letter to customers arguing that they had no direct exposure to FTX and that the company had a 1-to-1 reserve backing customer deposits.
“From day one, Gemini has prioritized the security of our customers’ assets. We never have and never will compromise on that point,” the letter said.
By January, the discussions between Gemini and Genesis had grown acrimonious. Gemini, which is facing a potential class action suit over the crisis, published an open letter calling for the ouster of Barry Silbert, CEO of Genesis's parent company.
The letter argued that Genesis was not forthcoming about the risks involved in its dealings with Three Arrows Capital, a hedge fund whose collapse helped add to the turmoil in crypto even before FTX failed.
"Genesis lenders, including Earn users, have been seriously harmed and deserve a resolution for the recovery of their assets," the letter said, alleging that Silbert and colleagues "conspired to make false statements and misrepresentations to Gemini."
In a statement responding to the Gemini letter, Genesis disputed that characterization.
"While we obviously do not agree with everything that Gemini has said, and we are disappointed that Gemini is waging a public media campaign despite ongoing productive private dialogue between the parties, we remain focused on finding a solution for our borrowing and lending intermediation business and reaching the best outcome for all affected Genesis lending and Gemini Earn clients," the Genesis statement said.
» Learn more: What to do if your crypto exchange fails