The Fallout from the FTX Collapse
In a plot twist that would make even the best soap opera writers envious, crypto lender Genesis and its parent company, Digital Currency Group (DCG), are allegedly $900 million in debt to clients of the cryptocurrency exchange Gemini. This jaw-dropping figure comes courtesy of a report from the Financial Times and is tied to the infamous collapse of the FTX exchange back in November.
Understanding the Gemini Earn Product
Gemini lends crypto enthusiasts the opportunity to earn a sweet 8% interest on their digital assets through a program aptly named Gemini Earn. This enticing offering invites users to lend out their cryptocurrencies, including Bitcoin and stablecoins, in a bid to make their funds work a little harder—until, of course, it doesn’t. Since the fallout from FTX, the product has taken a backseat, much to the chagrin of its users.
Temporary Withdrawal Suspension
On November 16, in a turn of events that had users gasping for breath, Genesis announced a suspension of withdrawals due to “unprecedented market turmoil.” Just days before this announcement, the lender revealed it had $175 million stuck in an FTX trading account. Talk about hitting a rough patch!
Gemini Responds with a Trust Center
Gemini, not one to take the news lying down, has rallied to form a creditor’s committee, aimed at recovering the reported millions from Genesis and DCG. As part of their strategy to regain customer trust post-FTX meltdown, they launched their Trust Center on November 29. This nifty feature gives clients a dashboard to check metrics related to their held funds, like how much air their wallet has left.
Caution from Clients
Despite these attempts at transparency, clients of the Earn program have made it clear that trust needs to be earned back. One disgruntled user tweeted, “Gemini will not be trusted by anyone if the EARN situation is not resolved for your customers.” No pressure, Gemini, but it looks like the ball is firmly in your court!
The Global Reach of Gemini
Since its launch in 2021, Gemini’s Earn program has garnered attention across more than 65 countries, from Croatia to Sweden. However, 2022 wasn’t all smooth sailing for the exchange, as it faced the grim reality of the bear market and decided to lay off 20% of its workforce.
The Silence from Gemini and Genesis
As the stakes continue to rise, responses from both Gemini and Genesis have been notably absent, igniting speculation and concern. Will they step up to clarify the situation? Only time will tell, but for now, their clients are left hanging like a drama queen at the end of a cliffhanger.
