Gemini agrees to return at least $1.1 billion to Earn users

The New York Department of Financial Services (NYDFS) announced on February 28, 2024 a Gemini Earn deal intended to facilitate the restitution of assets trapped in Genesis’ bankruptcy. Gemini pledged to return at least $1.1 billion in digital assets to clients, contribute $40 million to the bankruptcy estate, and pay a regulatory fine of $37 million.

How Earn worked

Gemini offered its clients performance on certain cryptoassets. To generate it, the assets were lent to Genesis Global Capital, which assumed the obligation to return them. When Genesis suspended withdrawals in November 2022, users discovered that the product involved counterparty risk and did not amount to an insured deposit.

The NYDFS maintained that Gemini had not conducted sufficient due diligence on Genesis during the life of the program. The supervisor also pointed out management and reservation practices that he considered poor. The agreement resolved those administrative issues without turning each claim about third parties into a criminal sentence.

The return depended on Genesis’ bankruptcy plan. Therefore, the February announcement did not mean that all customers immediately received their tokens. Judicial approval, availability of assets and execution of the distributions planned in the bankruptcy were required.

Payment in kind vs. dollar value

A decisive question was the form of restitution. If a customer had delivered a bitcoin, receiving only the dollar value calculated on the date of bankruptcy could leave them out of a subsequent raise. The agreement contemplated the return of the assets in kind, subject to the bankruptcy result.

The announced minimum of 1.1 billion used a monetary valuation, but the effective amount could change with the market. To report accurately it was necessary to distinguish token units, estimated value on a date and percentage of recognized credit. They are different measures and can produce seemingly contradictory headlines.

The contribution of 40 million reinforced Genesis’ assets, while the fine of 37 million corresponded to the regulatory consequence against the NYDFS. Neither figure in itself was the total return. Separating restitution, bankruptcy contribution and penalty avoids adding incompatible amounts.

What happened next

On May 29, 2024, Gemini reported a first distribution of approximately $2.18 billion in digital assets, equivalent to 97% of the units owed to Earn users. The dollar value was higher than when withdrawals were suspended because the tokens were returned in kind and their prices had changed.

In June, the New York District Attorney’s Office announced a separate settlement for about $50 million that completed the recovery of Earn investors and prohibited Gemini from operating crypto lending programs in the state. That resolution also required cooperation in ongoing litigation against other defendants.

Outlook from 2026

Since August 2026, Earn represents an exceptional case of recovery of digital assets owed in kind. The result should not be generalized to any crypto insolvency: it depended on the available portfolio, the agreements, the approved plan and the price evolution. Other creditors may receive different percentages or forms of payment.

Contractual teaching is still in force. Before accepting performance, it is advisable to identify whether the tokens remain in custody or are lent, who the borrower is, what guarantees exist and what law governs an insolvency. A well-known brand can facilitate access, but it is not a substitute for evaluating the legal destination of the assets.