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Gemini Trust’s controversial payout plan sparks backlash from creditors

Gemini

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TL;DR

  • Gemini Earn creditors furious over 30% Bitcoin payout cut.
  • Cryptocurrency market volatility amplifies creditor discontent.
  • Gemini Trust’s reputation at stake as creditors demand full restitution.

Gemini Trust’s plan to reorganize payouts for its Earn users has sparked outrage among creditors who stand to receive significantly less than expected. 

The proposal, which has been sent to creditors for a vote, could result in payouts worth just 30% of current market rates. This development comes as a shock to many, as it represents a sharp reduction from the originally promised amounts. Below, we delve into the details of this contentious situation.

Gemini proposed a reorganization plan

Gemini Trust, a well-known cryptocurrency exchange, recently unveiled a reorganization plan that has left its creditors frustrated and angry. The plan, outlined in an email sent to creditors on December 2023, has been met with strong opposition. 

Under the proposed plan, creditors are set to receive payouts equivalent to their Earn crypto balances as of January 2024. This date is significant as it coincides with the bankruptcy filing of Gemini’s lending partner, Genesis Global Capital.

Anger over reduced payouts

The proposed payouts have been met with anger and disappointment, primarily due to the vast disparity between the cryptocurrency market rates at the time of the bankruptcy filing and the present market prices. 

Back in January 2023, when Genesis Global Capital filed for bankruptcy, the price of Bitcoin was approximately $20,940, and Ether was valued at around $1,545. Fast forward to the present, and Bitcoin is valued at $42,750, with Ether at $2,250. 

This stark difference means that in a worst-case scenario where creditors are offered a 61% recovery rate, each Bitcoin that a creditor had on Earn would only amount to $12,773, or 30% of its current market value.

This drastic reduction in the expected payouts has led to strong opposition from Gemini’s creditors. Many have taken to social media to express their frustration and disappointment with the proposed plan. 

One user, Andrew Aleid, stated, “I vote no because this is a spit in our faces. Absolute disgrace.” Ian Malcolm voiced similar sentiments, accusing Gemini Trust of deceiving and lying to its customers. Malcolm emphasized the need for full restitution, saying, “You stole our money. Give it ALL back, every single dollar.”

Gemini’s troubled past

Gemini’s Earn program allowed users to earn interest in cryptocurrencies, and the exchange had withdrawn substantial sums from Genesis to support the program before Genesis’s bankruptcy. 

Now, Gemini is seeking to recover $1.6 billion from Genesis Global Capital on behalf of its Earn program users.

Creditors have until January 10, 2024, at 4 pm Eastern Standard Time to decide whether to accept or reject Gemini’s proposed plan. If the plan is accepted, the bankruptcy court overseeing the case will make the final decision on February 14, 2024.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Lacton Muriuki

Lacton is an experienced journalist specializing in blockchain-based technologies, including NFTs and cryptocurrency. He dabbles in daily crypto news rich with well-researched stats. He adds aesthetic appeal, adding a human face to technology.

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