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Crypto Quandary: Gemini's Dilemma
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Gemini, the cryptocurrency platform founded by the Winklevoss Twins, faces challenges following the bankruptcy filing of its partner Genesis in January.
A potential recovery strategy is pending approval from the court
Genesis, entangled in legal issues arising from an unpaid loan to its parent company DCG, has recently devised a repayment plan, subject to court approval. This plan aims to settle outstanding debts, including the $1.6 billion owed to Gemini, considering their custodial relationship.
Pending court approval, Gemini has informed its users of a potential solution, opening the floor for community voting. Earn users will soon receive detailed instructions on how to vote and access the Genesis Solicitation Package, including the Disclosure Statement. The Bankruptcy Court has deemed the Disclosure Statement sufficient for users to make informed decisions regarding the proposed plan.
Earn Update: Solicitation of the Genesis Plan of Reorganization (Plan) began today. Earn users were sent an email with specific instructions on how to vote on the Plan and a link to the Genesis Solicitation Package, including the Disclosure Statement.
— GeminiTrustCo (@GeminiTrustCo) December 13, 2023
The voting deadline is…
If the community approves the plan, all Gemini users, regardless of their initial investment (even those with less than $250), will be reimbursed based on the value of their crypto holdings on the 19th of January 2022, when Genesis faced financial troubles.
A considerable number intend to cast a negative vote
However, the correspondence to creditors overlooks a significant concern, which has not escaped the attention of Gemini's community. Users on X are expressing discontent with the proposal, particularly regarding the fact that crypto prices were considerably lower in January 2022. At that time, ETH was valued at around $1,545, and BTC at approximately $21,000.
The community's dissatisfaction stems from the perception that they were misled over the past year. Users feel betrayed, with some questioning the credibility of Gemini's communications. Many are inclined to vote against the proposed plan, as they believe it falls short of justice. Bloomberg analyst Seyffart has highlighted the potential losses users might incur if the plan is implemented, emphasizing the significant increase in crypto values since January 2022.
This could be brutal. Granted seems to be worst case scenario but Gemini Earn users could be getting potentially just 61% of the value of their crypto from Jan 19, 2023. WOOF.
— James Seyffart (@JSeyff) December 14, 2023
Even at 100% it stings based on current prices. Thats 61%-100% of:
Bitcoin $20,940
Ethereum $1,545 https://t.co/A6u28U3dsi pic.twitter.com/5SKZnlRjr9
As of the latest data from CoinGecko, one BTC is now valued at about $42.8k, and 1 ETH at $2,272. Consequently, the proposed payout would be substantially less than what users could have earned by self-custodying their assets. Moreover, the proposal fails to address the benefits promised to users who opted to keep their crypto on Gemini's platform. The community is raising valid concerns about the fairness and transparency of the proposed solution.
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