The liquidity crisis among major players in the cryptocurrency world has hit customers of the Gemini exchange particularly hard, with those who have deposits in the Gemini Earn program remaining unable to withdraw their assets. This situation has arisen in the wake of the recent FTX crash.
About the Gemini Earn Program
The Gemini Earn program is an opt-in program that pays rewards of up to 8% to customers who lend out certain cryptocurrencies. The assets in the program are supposed to be available within five business days of a customer's request. However, the current crisis has put a halt to any withdrawal requests.
Other assets held on the Gemini platform remain available for withdrawal. Gemini, co-founded by twins Cameron and Tyler Winklevoss, has emphasized that the liquidity crisis only affects the Gemini Earn program and not other assets on the platform.
What to Do If You Have Funds on Gemini Earn
If you have funds on Gemini Earn, it's advisable to take the following steps to protect your interests:
Record Keeping: Put together detailed records of how much cryptocurrency you have, what it's worth, and exactly where it's being held. This information can be useful in case of potential disputes.
Stay Informed: Gemini is updating customers about its progress in negotiating with Genesis Global Capital, the third-party lender that had been working with Gemini before it paused withdrawals in November.
Work with Experts: Gemini has formed a committee of creditors and is working with investment bank Houlihan Lokey to advise it during discussions with Genesis.
What Happened to Gemini Earn?
Gemini Earn had been lending funds to Genesis to generate the program's promised returns. However, in November, Genesis said it could no longer return customer funds, citing "abnormal" volumes of redemption requests after the collapse of the FTX exchange.
FTX and its U.S. branch, FTX.US, filed for Chapter 11 bankruptcy following a spike in withdrawals amid reports that the company had used customer funds on risky investments. The announcement by Gemini highlights how widespread the fallout of the FTX turmoil has become.
The recent events have challenged the preparedness of Gemini and other players in the cryptocurrency world. Gemini, which is based in the U.S., has positioned itself as a reliable, well-regulated alternative in the free-wheeling world of cryptocurrency.
Gemini Earn's rewards are generated through partnerships with accredited third-party borrowers like Genesis, who are vetted through a risk management framework that reviews the partners' collateralization management process.
Gemini vs Genesis: An Acrimonious Battle
By January, the discussions between Gemini and Genesis had turned acrimonious, with Gemini facing a potential class action suit over the crisis. Gemini published an open letter calling for the ouster of Barry Silbert, CEO of Genesis's parent company, alleging that Genesis was not forthcoming about the risks involved in its dealings with Three Arrows Capital, a hedge fund whose collapse helped add to the turmoil in the cryptocurrency world even before FTX failed.
Genesis disputed the characterization in a statement, saying that it remains focused on finding a solution for its borrowing and lending intermediation business and reaching the best outcome for all affected Genesis lending and Gemini Earn clients.
In conclusion, the current situation with Gemini Earn highlights the need for caution when it comes to investing in the cryptocurrency world. It's always wise to stay informed, keep detailed records, and work with experts in case of any potential disputes.
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