Crypto lender Genesis will return $3 billion to defrauded customers after company filed for bankruptcy
- Genesis will return as much as $3 billion to creditors and investors
- The troubled cryptocurrency lender filed for bankruptcy last January
A bankruptcy court judge has approved a plan by cryptocurrency lender Genesis Global to return about $3 billion to its creditors and investors, including thousands of people New York regulators say the company defrauded.
The plan and settlement approved Friday by Judge Sean H. Lane include up to $2 billion to settle a lawsuit by New York Attorney General Letitia James, who said the company misled investors about the risks of putting their money into a business program known as Gemini Earn. .
“This historic settlement is an important step in ensuring that the victims who invested in Genesis receive some semblance of justice,” James said in a statement Monday. “Once again, we are seeing the real-world consequences and damaging losses that can occur due to a lack of oversight and regulation within the cryptocurrency industry.”
“Once again, we are seeing the real-world consequences and damaging losses that can occur due to a lack of oversight and regulation within the cryptocurrency industry.”
Creditors whose claims are denominated in U.S. dollars will receive 100 percent of their loan balances from the company, which filed for bankruptcy last year. Those with cryptocurrency claims will experience a shortage, according to the decision.
New York Attorney General Letitia James expanded her lawsuit against crypto companies Genesis and Gemini in February, tripling the size of their alleged fraud scheme to more than $3 billion. That lawsuit has been settled now that Genesis’ bankruptcy plan has been approved
“We look forward to implementing the plan and making distributions as quickly as possible,” Derar Islam, CEO of Genesis Interim, said in a statement addressing the approval of his company’s bankruptcy plan.
The settlement includes a victim fund for Genesis’ creditors to help recover some of their losses, James’ office said.
“We look forward to implementing the plan and making distributions as soon as possible,” Genesis Interim CEO Derar Islamim said in a statement Friday.
Genesis was a partner for Gemini Earn, an investment program through New York-based crypto exchange Gemini.
The Winklevoss twins, Cameron and Tyler, founded Gemini in 2014 and helped pioneer the earning program in February 2021.
Genesis received loan money from Gemini while the earning program was still active, and when Genesis filed for bankruptcy in January 2023 following the collapse of FTX and Three Arrows Capital, Gemini Earn customers were scrambling for their money.
The Winklevoss twins have said that Genesis owes more than $900 million to about 340,000 Gemini Earn investors.
Cameron (left) and Tyler Winklevoss are also known for the idea that Mark Zuckerberg stole the idea for Facebook from them
Barry Silbert, founder and CEO of Digital Currency Group, owns Genesis and was involved in the feud between the company and the Winklevoss twins
On January 10, 2023, Cameron Winklevoss said that Barry Silbert should be ousted as CEO of Genesis parent company Digital Currency Group.
Over a year later, in March 2024, the two companies reached a settlement agreement in which Genesis would return cryptocurrency worth approximately $2 billion to approximately 232,000 Gemini customers whose assets were frozen in the lead-up to Genesis’ bankruptcy.
The latest breakthrough in Genesis’ bankruptcy proceedings came when bankrupt cryptocurrency exchange FTX said its customers would get 100 percent of their money back, plus interest.
Sam Bankman-Fried, founder of FTX, was sentenced to 25 years in prison in March for his role in stealing about $11 billion from his own customers.