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Gemini creditors revolt over ‘brutal’ Bitcoin slashing reorg plan

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Gemini creditors revolt over ‘brutal’ Bitcoin slashing reorg plan

Under the proposed plan, Gemini Earn users may only recover 61% of their lost funds in a worst-case scenario.

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Gemini Earn creditors are fuming over a proposed reorganization plan that could see their promised Bitcoin (BTC) payouts effectively slashed to about 30% of what they’re worth at current market rates.

In an X post, Gemini Trust revealed it sent creditors an email on Dec. 13 outlining the proposed plan, which has now been put up for a vote.

Under the proposed plan, creditors will receive a payout equal to their Earn crypto balances as of Jan. 19, 2023 — the date that Gemini’s cryptocurrency lending partner Genesis Global Capital filed for bankruptcy.

Some observers, including Bloomberg exchange-traded fund analyst James Seyffart, described the plan as “brutal” given the price of Bitcoin and Ether (ETH) was only $20,940 and $1,545 then, compared to how much they’re worth today — $42,750 for Bitcoin and $2,250 for Ether.

This would mean that in the worst-case scenario where creditors are given a 61% recovery, each Bitcoin that a creditor had on Earn would only be given $12,773, or 30% of what a Bitcoin is worth today.

Commenters of Gemini’s X post appeared in fierce opposition to the plan, with many of them urging creditors to “VOTE NO.”

One X (formerly Twitter) user “Andrew Aleid, said: “I vote no because this is a spit in our faces. Absolute disgrace.”

“You stole our money. Give it ALL back, every single dollar,” said Ian Malcolm in response to Gemini Trust’s X post. She added:

“How can any of your customers believe a single word you say when you have deceived and lied to us for WELL over a year.” Malcolm’s comments were made in reference to Gemini reassuring customers that it would not be subject to counterparty risk from Genesis.

Another X user, BC, said everyone should be paid back in full. “Anything less is unacceptable.”

Gemini Earn was a program where users earn interest in cryptocurrencies. Gemini withdrew hundreds of millions of dollars from Genesis to facilitate the program before Genesis went bankrupt.

The cryptocurrency exchange is now seeking to recover $1.6 billion from Genesis for Earn users.

Related: New York Attorney General sues Gemini, Genesis, DCG for allegedly defrauding investors

Creditors have until Jan. 10, 2024, at 4 pm Eastern Standard Time to accept or reject Gemini’s plan.

If the plan is accepted, the bankruptcy court overlooking the case will decide whether it gives final approval for the plan on Feb. 14, 2024.

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