Gemini Creditors Protest Plan Slashing Bitcoin Payouts by 70%
Discontent Among Gemini Creditors Over Proposed Bitcoin Reorganization Plan
Gemini creditors are upset over a proposed reorganization plan that could effectively reduce their promised Bitcoin payouts to about 30% of their current market value.
Proposed Plan and Creditors’ Response
In a post on X (formerly Twitter), Gemini Trust sent an email to creditors on December 13 outlining the proposed plan now up for vote. According to the proposed plan, creditors should receive a payout equal to their Earn-Crypto balance as of January 19, 2023 – the date when Gemini’s cryptocurrency lending partner, Genesis Global Capital, filed for bankruptcy.
Some observers, including Bloomberg’s exchange-traded fund analyst James Seyffart, described the plan as “brutal” since the prices for Bitcoin and Ether were only at $20,940 and $1,545 respectively at that time. The assets have since recovered to $42,750 and $2,250 respectively. This would mean that in the worst case, if creditors are granted a recovery of 61%, each Bitcoin a creditor had on Earn would only be worth $12,773 or 30% of what a Bitcoin is worth today.
Commentators on Gemini’s X post vehemently opposed the plan and urged creditors to “VOTE NO”.
Gemini Earn and the Consequences of Bankruptcy
Gemini Earn was a program where users received interest in cryptocurrencies. Gemini withdrew hundreds of millions of dollars from Genesis to enable the program before Genesis went bankrupt. The cryptocurrency exchange is now attempting to withhold $1.6 billion from Genesis for Earn users.
Creditors have until 4 p.m. Eastern Time on January 10, 2024, to accept or reject Gemini’s plan. If the plan is accepted, the bankruptcy court overseeing the case will decide whether to give final approval on February 14, 2024.
Loss of Trust and Criticism
The creditors’ comments testify to a clear loss of trust in Gemini. They accuse the company of having deceived and lied to them and demand a full repayment of their deposits. It remains to be seen how Gemini will respond to this criticism and whether the proposed plan will actually be implemented.
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