- Gemini has terminated the Master Loan Agreement (MLA) between Earn users and Genesis.
- The termination meant that the crypto yield program had ended.
- The loan agreement termination is effective January 8.
- Gemini said it would โoperate with the utmost urgencyโ to return Earn users over $900 million stuck with Genesis.
Crypto exchange Gemini has informed its Earn users that it has terminated Genesisโ loans and, in effect, ended the yield program.
The exchange said in an email sent to its customers on Tuesday that it has terminated the Master Loan Agreement (MLA) between its users and Genesis Global Trading, Genesisโ lending arm.
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โThis [...] requires Genesis to return all assets outstanding in the program. Existing redemption requests are not impacted and continue to await fulfillment by Genesis,โ Gemini said.
The exchange said it will prioritize returning them over $900 million stuck with Genesis and โoperate with the utmost urgency.โ
The loan termination is effective January 8, the exact date by which Gemini co-founder Cameron Winklevoss had asked Digital Currency Group (DCG), which owns Genesis, CEO Barry Silbert, to solve the withdrawal issues. Silbert failed to do so.
Winklevoss Beef with Silbert
Gemini co-founder Winklevoss started talking publicly about the exchangeโs complicated relationship with Genesis more than a week ago when he published his first open letter to Silbert.
In the letter, Winklevoss accused Silbert of โbad faith stall tacticsโ related to the $900 million Genesis owes to Gemini Earn customers. Winklevoss also said that DCG and Genesis are โbeyond commingled,โ perhaps alluding to how business was done at FTX.
Silbert responded to Winklevoss’ letter saying that itโs all false and that Genesis has been in honest contact with Gemini.
When the January 8 deadline passed without any progress, Winklevoss published another public letter on January 10, addressing the DCG board. He accused Silbert of accounting fraud, saying that Genesis lied when it claimed that DCG absorbed Genesisโ losses related to the bankruptcy of the crypto hedge fund Three Arrows Capital.
Winklevoss said there is โno pathโ to finding a solution to the situation with Silbert being the CEO. He asked the board to โimmediatelyโ remove him from the company.
DCG responded by saying that Winklevossโ latest accusations are โmalicious, fake, and defamatory attacks. The conglomerate said that Winklevoss is trying to โdeflect blame from himself and Gemini, who are solely responsible for operating Gemini Earn and marketing the program to its customers.โ
Genesis interim CEO Derar Islim had earlier said that the lender is โcommitted to moving forward as quickly as possibleโ but cautioned that the company needs โadditional timeโ to solve its liquidity problems.
On the Flipside
- Itโs unclear what path Gemini will take if the DCG board doesnโt comply with Winklevossโ demands.
- Itโs possible that Gemini Earn users are going to need to wait years to retrieve their funds.
Why You Should Care
The beef between Gemini and DCG has been intense over the last weeks. Itโs unclear whatโs going to happen. Thus, investors and users should keep an eye on the situation. If either of the entities goes bankrupt, that could mean more pain price-wise in the short term.
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