Gemini Earn customers face potential $485M shortfall in Genesis bankruptcy case

Gemini Earn clients face a prospective $485 million shortfall in their bid to be made entire following the Genesis bankruptcy.Gemini Earn paid benefits

to consumers who lent cryptocurrency to the program. Clients’tokens were then lent to counterparties, in this case, Genesis, who produce yield by trading and investing.After months of insolvency reports, Genesis declared Chapter 11 personal bankruptcy on Jan. 19, triggering panic among its creditors.The personal bankruptcy filing showed that Genesis owed its creditors$3.5 billion; the biggest is Gemini, with a$769 million balance due.In an unanticipated advancement, Genesis now claims it has fulfilled its obligations to Gemini by paying out the earnings of a private sale of Grayscale Bitcoin Trust(GBTC )shares that collateralized the debt.Gemini Earn customers on

the back foot On Aug. 15, 2022, Genesis promised 30.9 million GBTC shares as collateral for Gemini Earn’s customers’tokens. This plan was later extended on Nov. 7, 2022. Incidentally, FTX applied for personal bankruptcy on Nov. 11, 2022

, following weeks of insolvency reports beforehand.On Nov.

16, 2022, Genesis froze withdrawals from its platform and informed Gemini that it had actually sold the collateralized GBTC shares at$9.20 per share, netting$284.3 million. However, with a balance owed of$769 million, the deficiency amounts to$484.7 million.Given the “behind-the-scenes

“arrangement between the 2 parties, Genesis now claims the $769 million balance owed to Gemini Earn consumers has actually been paid with the GBTC share sale.What now?The conflict needs the judge managing the insolvency to phone on whether the contract stands. However, Gemini will likely challenge the claim,

leading to court action.This could even more delay the insolvency case, implying Gemini Earn customers may be set for a long haul before recovering their funds. However, the $284.3 million may

be all that

is due.In a more blow, Genesis classified Gemini as a”Class IV “unsecured creditor. Gemini Earn customers are behind institutional financial institutions, secured creditors, and concern claims in carving

out the company’s remaining assets.Posted In: Bitcoin, Gemini, Bankruptcy, Exchanges Recent Genesis Stories Genesis subsidiary takes legal action against’Bitcoin Jesus’for$20.86 M Oluwapelumi Adejumo · 8 hours earlier · 1 minutes read Gemini Earn consumers face possible $485M deficiency in Genesis insolvency case Samuel Wan · 1 day ago · 2 min read