Genesis on the hook for $900m of Gemini client funds

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Updated December 5, 2022 | Published December 5, 2022

2 mins read

Gemini clients are now seeking to recoup as much as $900m from crypto brokerage Genesis as clouds gather over the two companies.

Cryptocurrency brokerage Genesis continues to face problems as the company now allegedly owes Gemini clients more than $900m that it cannot muster.

The issue seems to stem from the fact that the Gemini Earn program, which is operated by Genesis, is tied with an 8% yield which has been too optimistic for the company to cover in full.

This has been especially challenging amid the collapse of cryptocurrency markets which are undergoing a period known as “crypto winter”.

The Financial Times reported the news after Genesis announced last week that it would put customer withdrawals on hold temporarily, raising concerns that the brokerage may not be able to repay customers whose funds are stuck on the platform.

The latest development is tied to the sudden and unexpected collapse of another exchange, FTX, which turned out to be running more than $8bn in liabilities against $1bn of cash and liquidity.

Gemini’s own overreaching project to attract more customers led it to up a loyalty product, Gemini Earn, with the help of Genesis, and promised consumers 8% interest. Meanwhile, Gemini has set up a creditor’s committee with the hopes of recouping the locked funds from Genesis.

Gemini has been working on further strengthening client trust in its products and has set up a “Trust Center”, which is a dashboard that allows consumers to check out the funds held by Gemini and on behalf of the exchange.

However, just being able to reference the available funds was not enough for many customers whose funds are still locked. Some argued that their trust may only be restored when withdrawal earnings are resumed.

In November, Genesis assured that it had no plans to file for bankruptcy.

Looking for your next crypto casino? Check out: Bitcasino, Gamb.co or FortuneJack.

Written by Alex

Reporter

Alex is a well-rounded crypto writer who focuses on general market and legal developments. His main interest lies in how crypto gaming can become a more permanent part of the gaming landscape and how blockchain holds benefits to players they are not even aware of.
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