Cryptocurrency exchange Gemini Trust proposes a reorganization plan that could significantly reduce payouts for creditors in its Gemini Earn program. The plan faces strong backlash from users, with accusations of misleading information and calls for full repayment. The proposed payout is linked to January 19, 2023, cryptocurrency balances, reflecting lower values compared to the current market. Creditors have until January 10, 2024, to vote on the plan, with final court approval expected on February 14, 2024.
Gemini’s Drastic Crypto Payout Reduction Plan
Earn Update: Solicitation of the Genesis Plan of Reorganization (Plan) began today. Earn users were sent an email with specific instructions on how to vote on the Plan and a link to the Genesis Solicitation Package, including the Disclosure Statement.
The voting deadline is…
— GeminiTrustCo (@GeminiTrustCo) December 13, 2023
Gemini Trust, in an X post on December 13, revealed a proposed reorganization plan affecting creditors in its Gemini Earn program. The plan, now up for a vote, suggests a potential 70% reduction in expected cryptocurrency payouts for these creditors.
Basis and Criticism of the Plan
The proposed payout plan links creditor payouts to their Earn crypto balances as of January 19, 2023, the date of Genesis Global Capital’s bankruptcy filing. Critics find this basis unfavorable, as major cryptocurrencies like Bitcoin (BTC) and Ether (ETH) had significantly lower values at that time than their current market prices.
This could be brutal. Granted seems to be worst case scenario but Gemini Earn users could be getting potentially just 61% of the value of their crypto from Jan 19, 2023. WOOF.
Even at 100% it stings based on current prices. Thats 61%-100% of:
Bitcoin $20,940
Ethereum $1,545 https://t.co/A6u28U3dsi pic.twitter.com/5SKZnlRjr9— James Seyffart (@JSeyff) December 14, 2023
Analyst James Seyffart from Bloomberg highlighted the stark contrast, emphasizing that Bitcoin and Ether were priced at $20,940 and $1,545 during the plan’s basis, compared to their current values of $42,794 and $2,276.
User Backlash and Deadline
Gemini users expressed strong dissatisfaction with the proposed plan, labeling it “brutal” and an “absolute disgrace.” Many users accused Gemini of misleading information and called for full repayment. Creditors must cast their votes by January 10, 2024, with final court approval expected on February 14, 2024.
Gemini Earn Program Background
Gemini’s Earn program allowed users to earn interest on their cryptocurrency holdings. The exchange withdrew hundreds of millions from Genesis before its bankruptcy, leading to the current attempt to recover $1.6 billion from Genesis for Earn users.
This development has sparked a significant outcry from the Gemini community, emphasizing the challenges and risks associated with crypto lending and the potential impact on users’ financial positions.
