Gemini Trust’s proposed reorganization plan for its Gemini Earn creditors has sparked significant controversy due to its potential impact on the payouts creditors might receive. The plan, which was communicated to creditors via email on December 13 and is now up for a vote, proposes that creditors receive a payout equivalent to their Earn crypto balances as of January 19, 2023. This date is significant because it’s when Gemini’s cryptocurrency lending partner, Genesis Global Capital, filed for bankruptcy.
The issue causing discontent among creditors is the valuation of their crypto assets. On January 19, the prices of Bitcoin (BTC) and Ether (ETH) were substantially lower than their current market rates. Bitcoin and Ether were valued at approximately $20,940 and $1,545, respectively, on that date. As of the time of the report, their values had risen to around $42,750 and $2,250. Under the worst-case scenario of a 61% recovery rate, each Bitcoin held in the Earn program would be valued at only $12,773, which is about 30% of its current market value.
This proposal has been met with fierce opposition from creditors, as seen in the responses to Gemini’s post on X (formerly Twitter). Many users are urging a “NO” vote on the plan. One user, Andrew Aleid, expressed his dissatisfaction, calling the proposal a “spit in our faces” and an “absolute disgrace.” Another user, Leslie, accused Gemini of deceit and lying, referencing Gemini’s previous assurances that it would not be subject to counterparty risk from Genesis.
BC, another X user, argued that everyone should be paid back in full, deeming anything less as unacceptable. The sentiment among these users reflects a broader dissatisfaction and a demand for full reimbursement of their investments.
Gemini Earn was a program that allowed users to earn interest on their cryptocurrency holdings. Before Genesis’ bankruptcy, Gemini had withdrawn hundreds of millions of dollars from Genesis to support this program.
Gemini is currently attempting to recover $1.6 billion from Genesis for Earn users. Creditors have until January 10, 2024, at 4 pm Eastern Time to cast their votes on the proposed plan. If accepted, the bankruptcy court overseeing the case will make a final decision on its approval on February 14, 2024. The outcome of this vote and the subsequent court decision will be crucial for the creditors involved.
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