Crypto lender Genesis will return $3 billion to defrauded customers after company filed for bankruptcy

A bankruptcy court judge has approved a plan by the cryptocurrency lender Genesis Global to return about $3 billion to its creditors and investors, including thousands of people who New York regulators say were defrauded by the company.

The plan and settlement approved Friday by Judge Sean H. Lane includes up to $2 billion to settle a lawsuit by New York Attorney General Letitia James, who said the company misled investors about the risks of putting their money into a company program known as Gemini Earn.

'This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice,' James said in a statement Monday. 'Once again, we see the real-world consequences and detrimental losses that can happen because of a lack of oversight and regulation within the cryptocurrency industry.'

'Once again, we see the real-world consequences and detrimental losses that can happen because of a lack of oversight and regulation within the cryptocurrency industry.'

Creditors whose claims were in U.S. dollars will be receiving 100 percent of their loan balances by the firm, which filed for bankruptcy last year. Those with claims in cryptocurrency will see some short of shortfall, according to the decision.

New York Attorney General Letitia James expanded her lawsuit against crypto firms Genesis and Gemini in February, tripling the size of their alleged fraud scheme to more than $3 billion. That lawsuit has been settled now that Genesis' bankruptcy plan has been approved

'We look forward to putting the Plan into effect and making distributions as expeditiously as possible,' Genesis Interim CEO Derar Islim said in a statement addressing his company's bankruptcy plan being approved

The settlement includes a victim fund for Genesis' creditors to help recover some of their losses, James' office said.

'We look forward to putting the Plan into effect and making distributions as expeditiously as possible,' Genesis Interim CEO Derar Islim said in a statement on Friday.

Genesis was a partner for Gemini Earn, an investment program through the New York-based crypto exchange Gemini.

The Winklevoss twins, Cameron and Tyler, founded Gemini in 2014 and help pioneer the earn program in February 2021.

Genesis received lent funds from Gemini while the earn program was still up and running, and when Genesis went bust in January 2023 after the collapse of FTX and Three Arrows Capital, Gemini Earn customers were looking for their money.  

The Winklevoss twins have said Genesis owed more than $900 million to some 340,000 Gemini Earn investors. 

 Cameron (left) and Tyler Winklevoss are also known for purporting the idea that Mark Zuckerberg stole the idea for Facebook from them

Barry Silbert, founder and CEO of Digital Currency Group, owns Genesis and was involved in the feud between the company and the Winklevoss twins

On January 10, 2023, Cameron Winklevoss said Barry Silbert should be removed as CEO of Genesis parent Digital Currency Group.

Over a year later in March 2024, the two companies reached a settlement agreement wherein Genesis would return cryptocurrency worth around $2 billion back to roughly 232,000 Gemini customers whose assets were frozen in the lead up to Genesis going bankrupt. 

The most recent breakthrough in the Genesis bankruptcy proceedings come as bankrupt cryptocurrency exchange FTX said its customers would receive 100 percent of their money back plus interest.

Sam Bankman-Fried, founder of FTX, was sentenced to 25 years in prison in March for his role in stealing roughly $11 billion from his own customers.