Gemini Returns $2.2B to Users After 18-Month Withdrawal Pause

May 30, 2024: In a move aimed at regaining user trust, cryptocurrency exchange Gemini announced restoring $2.2 billion in digital assets to users. This follows an 18-month suspension of withdrawals from the platform’s Earn program, which offered interest-bearing accounts in partnership with crypto broker Genesis. The reintegration of funds stems from a significant settlement reached between Genesis and the New York Attorney General’s office.

The Earn program’s suspension in November 2022 stemmed from liquidity issues encountered by Genesis, which had exposure to the bankrupt crypto hedge fund Three Arrows Capital. This triggered a domino effect, impacting Gemini’s ability to distribute funds from the program. Subsequently, the exchange faced criticism from users regarding the lack of transparency and delayed access to their holdings.

The recent settlement with the New York Attorney General mandated the return of a substantial portion of user funds held by Genesis. Gemini has indicated that approximately 97% of the initial Earn program distributions are now available in user accounts. The remaining 3% is expected to be returned within the next year.

This development signifies a potential turning point for Gemini, which has strived to maintain user confidence throughout the ordeal. The exchange has emphasized its commitment to regulatory compliance and has undertaken efforts to bolster its risk management protocols. The successful return of a significant portion of frozen funds is likely to be viewed favorably by users and could serve to stabilize Gemini’s position within the cryptocurrency exchange landscape.

The broader cryptocurrency industry continues grappling with lending platform issues and liquidity risks. Gemini’s experience serves as a cautionary tale, highlighting the potential pitfalls of these offerings. Moving forward, regulators are likely to increase scrutiny of crypto lending activities, potentially leading to stricter regulations.

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