The initial statement from Gemini:
Will I lose my money in Earn?
Our understanding is that Genesis paused withdrawals due to a liquidity issue resulting from a liquidity duration mismatch between Genesis' assets and its liabilities.
More specifically, we understand that Digital Currency Group, Inc. (DCG) - the parent company of Genesis - owes Genesis ~$1.675 billion dollars: $1.1b in the form of a promissory note due in June 2032 and ~$575m in the form of an intercompany loan due in May 2023.
In the wake of the FTX collapse, Genesis creditors made redemption requests that could not be met immediately due to the market turmoil and the longer timeline of the DCG liability repayments to Genesis. As a result, Genesis paused withdrawals on November 16, 2022.
If our understanding is correct - that this is a liquidity issue (i.e., cash-flow insolvency) - then a full recovery of funds for Earn users is possible.
If this is a Genesis balance sheet issue (i.e., balance-sheet insolvency) whereby its assets are less than its liabilities, then a loss of some amount is possible.
We do not have an indication at this time that this is a Genesis balance sheet issue, rather a liquidity/cash-flow issue.
[(Uhh, if the only reason they have a solvent balance sheet is because their parent company gave them a 1 year lOU in May and a 10 year IOU in June, then they really probably are functionally insolvent)]
