Sokipiriye Dokubo
Genesis, a crypto lending firm under the Digital Currency Group (DCG), has finalized a $2 billion agreement to refund users impacted by its bankruptcy in 2023. The settlement aims to repay customers approximately 77% of their crypto deposits made to Genesis for yield, as reported by the Wall Street Journal.
The settlement, endorsed recently, marks a significant move towards compensating investors for their losses. New York Attorney General Letitia James commented, “When investors fall victim to fraud and manipulation, it is essential to make them whole. This significant settlement is a crucial step in delivering justice to the Genesis investors.”
Following its bankruptcy filing in January 2023, Genesis faced financial challenges amidst a downturn in the crypto market and the collapse of associated entities like the FTX exchange and Three Arrows Capital. These events led to Genesis being unable to fulfill its financial commitments.
After the bankruptcy, Genesis and its parent company, DCG, engaged in a public dispute with Gemini, a former partner, regarding around $900 million owed to Gemini’s clients through its Gemini Earn lending platform. In February, Genesis received approval to sell around $1.6 billion in shares of the Grayscale Bitcoin Trust (GBTC) and other Grayscale crypto products to generate funds for repayments.
Moreover, Genesis agreed to a $21 million settlement with the U.S. Securities and Exchange Commission (SEC) for operational issues. However, this payment will only occur after reimbursing creditors.
Gemini also addressed the matter by committing to fully repay its Earn program clients a total of $1.1 billion and paying a $37 million fine to the New York Attorney General’s office in February.
These settlements and financial actions demonstrate the industry’s ongoing efforts to stabilize the crypto lending sector and provide compensation to affected investors. Resolving these cases is crucial for rebuilding trust in the cryptocurrency market, which has grappled with turbulence and scrutiny in recent years.