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Gemini Customers Recover Over $2 Billion in Cryptocurrencies from Genesis Bankruptcy
By Dietrich Knauth
NEW YORK (Reuters) -Failed cryptocurrency lender Genesis and cryptocurrency exchange Gemini have returned more than $2 billion in cryptocurrencies to 232,000 retail customers in their jointly run Gemini Earn program, offering customers a 242% return on assets blocked from January 2023, Gemini said on Wednesday.
Unlike other cryptocurrency companies that went bankrupt after a market crash in 2022, Genesis was able to return customers’ cryptocurrencies to them instead of liquidating a limited pool of assets and paying them back in cash.
Customers who lent a bitcoin to Genesis will receive one back, benefiting from the dramatic rise in the coin’s price since the company went bankrupt, Gemini said. The price of Bitcoin has more than tripled since January 2023, reaching over $67,000.
“We are thrilled that we were able to make this recovery happen for our customers,” Gemini co-founder Cameron Winklevoss said in a statement. “We recognize the difficulties caused by this lengthy process and appreciate our customers’ continued support and patience throughout the process.”
Gemini customers will receive approximately 97% of their refund immediately and the remainder within 12 months.
Genesis had previously estimated that its customers, including larger investors who were not part of the Earn program, would receive a 77% recovery in the event of bankruptcy.
“We did not limit their requests to the value of the petition date,” Genesis attorney Sean O’Neal said Wednesday. “We must now focus on distributions to Genesis’ remaining creditors.”
Gemini customers who participated in the Gemini Earn program lent their cryptocurrencies to Genesis and received interest on their loaned assets. The total value of Gemini Earn’s assets was $940 million when Genesis froze customer accounts in November 2022, Gemini said.
New York Attorney General Letitia James said the Gemini Earn program was a “scam” that deceived investors and sued Genesis, Gemini and Genesis’ parent company, Digital Currency Group, over the program.
James reached a settlement with Genesis in February that required Genesis to repay Earn’s customers before other creditors, including the state of New York and Digital Currency Group.
“When investors suffer losses due to fraud and manipulation, they deserve to be made whole,” James said in a statement.
DCG had argued that Genesis customers should be reimbursed based on the value of the cryptocurrencies in January 2023. Under that argument, which a judge rejected on May 17, DCG could take the “excess” value from the increase of cryptocurrency prices, rather than returning it to Genesis customers.
The story continues
James’ lawsuit disrupted Genesis’ efforts to restart its business, prompting the company to move into bankruptcy liquidation instead.
(Reporting by Dietrich Knauth; Editing by Josie Kao and David Gregorio)
News
How Ether Spot ETF Approval Could Impact Crypto Prices: CNBC Crypto World
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CNBC Crypto World features the latest news and daily trading updates from the digital currency markets and gives viewers a glimpse of what’s to come with high-profile interviews, explainers and unique stories from the ever-changing cryptocurrency industry. On today’s show, Ledn Chief Investment Officer John Glover weighs in on what’s driving cryptocurrency prices right now and how the potential approval of spot ether ETFs could impact markets.
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Miners’ ‘Capitulation’ Signals Bitcoin Price May Have Bottomed Out: CryptoQuant
According to CryptoQuant, blockchain data shows signs that the Bitcoin mining industry is “capitulating,” a likely precursor to Bitcoin hitting a local price bottom before reaching new highs.
CryptoQuant analyzed metrics for miners, who are responsible for securing the Bitcoin network in exchange for newly minted BTC. As outlined in the market intelligence platform’s Wednesday report, multiple signs of capitulation have emerged over the past month, during which Bitcoin’s price has fallen 13% from $68,791 to $59,603.
One such sign includes a significant drop in Bitcoin’s hash rate, the total computing power that backs Bitcoin. After hitting a record high of 623 exashashes per second (EH/s) on April 27, the hash rate has fallen 7.7% to 576 EH/s, its lowest level in four months.
“Historically, extreme hash rate drawdowns have been associated with price bottoms,” CryptoQuant wrote. In particular, the 7.7% drawdown is reminiscent of an equivalent hash rate drawdown in December 2022, when Bitcoin’s price bottomed at $16,000 before rallying over 300% over the next 15 months.
This latest hash rate drop follows Bitcoin’s fourth cyclical “halving” event in April, which cut the number of coins paid out to miners in half. According to CryptoQuant’s Miner Profit/Loss Sustainability Indicator, this has left miners “mostly extremely underpaid” since April 20, forcing many to shut down mining machines that have now become unprofitable.
CrypotoQuant said that miners faced a 63% drop in daily revenue after the halving, when both Bitcoin block rewards and transaction fee revenues were much higher.
During this time, Bitcoin miners were seen moving coins from their on-chain wallets at a faster rate than usual, indicating that they may be selling their BTC reserves“Daily miner outflows reached their highest volume since May 21,” the company wrote.
Among the sales of Bitcoin miners, whales and national governmentsBitcoin’s price drop in June also hurt Bitcoin’s “hash price,” a metric of Bitcoin Miner Profitability per unit of computing power.
“Average mining revenue per hash (hash price) continues to hover near all-time lows,” CryptoQuant wrote. “Hashprice stands at $0.049 per EH/s, just above the all-time low hashprice of $0.045 reached on May 1st.”
By Ryan-Ozawa.
News
US Congressman French Hill Doubles Down on Trump’s Pro-Crypto Stance
US lawmaker French Hill has noted that Donald Trump will take a more pro-crypto approach than the current administration. The run-up to the presidential election has seen cryptocurrencies become an issue with lawmakers making huge statements ahead of the polls. Donald Trump has also been reaching out to the industry, making a pro-crypto case.
French Hill Backs Trump’s Pro-Crypto Stance
Republican Congressman French Hill has explained the type of cryptocurrency regulatory framework he believes Donald Trump could adopt in the country. In a recent interview with CNBC, French Hill said that the recently passed FIT21 bill is the type of regulatory framework the Trump administration will adopt in the sector.
#FIT21 passed the House with 71 Democratic votes, it’s exactly the kind of digital asset regulatory framework former President Trump would support if re-elected.
See more on @SquawkCNBC🔽 photo.twitter.com/ceTmU4LApU
— French Hill (@RepFrenchHill) July 3, 2024
THE FIT21 Bill It is intended to protect investors and consumers in the market by establishing clear rules and powers for the various regulators in the sector. According to Hill, Trump will adopt it because it directs the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on the specific regulatory framework needed in the market.
“… for people who are innovating and starting a crypto token, a related business, custody of those assets, how to ensure consumer protection, so I think that framework is the right approach and that’s what I’m going to recommend to the President to pass, which is that we have not passed it between now and the end of this Congress.”
He also called Trump an innovative and pro-growth president in financial matters.
Cryptocurrency is going mainstream
This election cycle saw the cryptocurrency industry taking a place in mainstream issues following broader adoption across demographics. From candidates moving toward enthusiasts to recent pro-Congress legislation, cryptocurrencies have become a rallying point for officials. The U.S. regulatory landscape has been criticized for stifling growth due to frequent SEC LawsuitsThis has led executives to push for pro-cryptocurrency laws and raise money for pro-industry candidates.
Read also: Federal Reserve Predicts “AI Will Be Deflationary” to Stimulate Economy
David is a financial news contributor with 4 years of experience in Blockchain and cryptocurrency. He is interested in learning about emerging technologies and has an eye for breaking news. Keeping up to date with trends, David has written in several niches including regulation, partnerships, cryptocurrency, stocks, NFTs, etc. Away from the financial markets, David enjoys cycling and horseback riding.
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US Court Orders Sam Ikkurty to Pay $84 Million for Cryptocurrency Ponzi Scheme
A federal court has ordered Jafia LLC and its owner, Sam Ikkurty, to pay nearly $84 million to cryptocurrency investors after ruling that the company was operating a Ponzi scheme.
The ruling, issued by Judge Mary Rowland in the U.S. District Court for the Northern District of Illinois, follows a lawsuit filed by the Commodity Futures Trading Commission (CFTC) in 2022 after the fund collapsed.
Judge Rowland found that Ikkurty, based in Portland, Oregon, did numerous false claims on his company’s hedge funds.
These included misleading statements about his trading experience and the promise of high and stable profits. Instead, Ikkurty used funds from new investors to pay off previous investors, a hallmark of a Ponzi scheme.
The Ponzi Scheme
The court found that Ikkurty misappropriated investment funds for personal use without the knowledge of the investors. These funds were used for personal use and were reported as Fraudulent Investmentscausing significant financial losses to customers.
This non-transparent operation violated Transparency Commission regulations, which led to the imposition of a hefty fine to compensate defrauded investors and restore some public confidence in the financial system.
Judge Rowland emphasized that fraudulent activity such as this violates the law and undermines the integrity of modern financial markets. The $84 million award seeks to address the financial harm inflicted on investors and reinforce the importance of legal compliance in cryptocurrency trading.
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