The former users of the now-defunct Gemini Earn platform have been eagerly anticipating the return of their funds. However, the recent unveiling of a restructuring plan has cast a shadow of uncertainty over their expectations. It appears that customers may receive significantly less than what they initially invested in the platform.
Recovery Prospects: Only 61% of Crypto Value Expected
Since the fateful date of January 19, 2023, when Gemini filed for bankruptcy, users have been holding their breath, hoping for a brighter outcome. Unfortunately, the latest developments suggest that they might be in for a major letdown. According to the reorganization plan, Gemini Earn users may potentially receive just 61% of the value of their cryptocurrency holdings.
The plan’s unveiling has ignited a firestorm of reactions within the cryptocurrency community. ETF analyst James Seyffart expressed his concerns, calling the situation “brutal” and highlighting the worst-case scenario. Even if the recovery rate reaches the maximum of 100%, users are still likely to feel the pinch due to the current market conditions.
Gemini’s Proposed Recovery Plan
On December 13, Gemini submitted a plan of reorganization in bankruptcy court, laying out the blueprint for initial distributions to Earn users. The disclosure statement outlines a wide range, estimating that users could potentially recover between 61% to 100% of their account balances accumulated through the Gemini Earn platform. Moreover, the plan hints at additional funds that could materialize through potential litigation by Gemini.
To add to the complexity, users have received instructions on how to review the statement and cast their votes to accept or reject the proposed plan. The deadline for this crucial decision-making process is January 10, 2024. If the plan is confirmed and becomes effective, it will trigger an initial distribution to Gemini Earn users, with the possibility of subsequent distributions down the line.
However, should users decide to reject the plan, Gemini warns of the necessity to develop an alternative strategy, inevitably causing substantial delays in fund distribution, stretching over several months.
Mixed Reactions and Outcries
Unsurprisingly, the cryptocurrency community has not taken these developments lightly. Outcries and calls to reject the plan and demand full reimbursement of assets have flooded online forums. The sentiments are strong, with users expressing their frustration over the perceived lack of transparency and fairness.
To provide some context, the United States Securities and Exchange Commission (SEC) had previously charged Gemini for the unregistered offering and sale of securities via its Earn program in January. The Earn program, which launched in February 2021, aimed to allow retail investors to earn interest on their cryptocurrency holdings. Additionally, Gemini faced allegations of misleading customers regarding the FDIC status of their GUSD stablecoin deposits. In February, Gemini and lending company Genesis reached a $100 million agreement to settle issues related to the Earn program.