Gemini Earn creditors are up in arms over a proposed reorganization scheme that could significantly diminish the value of their expected Bitcoin payouts, potentially reducing them to only 30% of their current market value.
In a recent communication on X (formerly known as Twitter), Gemini Trust announced that it had dispatched an email to creditors on December 13, outlining a reorganization plan that is now open for voting.
According to this proposed plan, creditors will be entitled to receive a payout equivalent to the balances in their Earn crypto accounts as of January 19, 2023.
This date coincides with the bankruptcy filing by Genesis Global Capital, Gemini’s cryptocurrency lending partner.
Critics, including Bloomberg’s exchange-traded fund analyst, James Seyffart, have characterized this plan as “harsh” considering that Bitcoin and Ether were valued at just $20,940 and $1,545 at the time of the bankruptcy filing. At present, these assets have surged to $42,750 and $2,250, respectively.
In a worst-case scenario where creditors receive a 61% recovery, each Bitcoin held in an Earn account would be redeemed for only $12,773, amounting to a mere 30% of its current market value.
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The proposal has elicited a strong negative response from Gemini’s community on X, with many urging creditors to vote against it.
One user, Andrew Aleid, expressed his disapproval, labeling it a “disgrace” and accusing Gemini of theft.
Another commenter, Leslie, castigated the platform for its deception and demanded full reimbursement, questioning Gemini’s credibility in light of past reassurances that customers wouldn’t be exposed to counterparty risk from Genesis.
BC, another X user, advocated for full repayment, asserting that anything less would be “unacceptable.”
Gemini Earn was a program that allowed users to earn interest in cryptocurrencies, and the platform had transferred substantial funds from Genesis to support it before Genesis declared bankruptcy. Now, Gemini is pursuing a $1.6 billion recovery from Genesis on behalf of Earn users.
Creditors have until January 10, 2024, at 4 pm Eastern Time to accept or reject Gemini’s proposed plan. Should it be approved, the bankruptcy court overseeing the case will make its final decision on February 14, 2024.
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