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Crypto exchange Gemini Trust Co. withdrew hundreds of millions of dollars from Genesis Global Holdco LLC several months before the lender froze deposits and ultimately filed for bankruptcy, Bloomberg News reported. Genesis and Gemini offered customers in the so-called Earn program the opportunity to generate yields on their crypto tokens. The service let customers of the Tyler and Cameron Winklevoss-owned exchange lend their tokens through Genesis. In August 2022, Gemini took out about $282 million in cryptocurrency from Genesis. The funds withdrawn from Genesis were used to build out a reserve intended to ensure Gemini Earn customers could make immediate redemptions. None of the money went directly to Gemini’s billionaire founders, the Winklevoss twins. Days after the collapse of FTX sent the already beleaguered crypto market into a spiral, Genesis froze customer withdrawals. In January, it filed for chapter 11 protection in New York. Gemini has since filed a claim in the bankruptcy court seeking $1.1 billion on behalf of Earn users. In the months since the initial withdrawal freeze, Gemini, Genesis and its parent company Digital Currency Group have been locked in settlement negotiations that have included public sparring between DCG’s founder Barry Silbert and the Winklevoss twins.

Ohio victims of child sexual abuse while in the Boy Scouts of America could see more compensation for the crimes committed against them under legislation passed by the state Senate yesterday in a unanimous vote, and expected to be approved in the House, the Associated Press reported. The bill’s passage comes amid the organization’s bankruptcy settlement, first filed in 2020 after tens of thousands of men nationwide brought forth claims they had been sexually abused by their Scout leaders. The organization filed bankruptcy in an attempt to continue operating while still partially compensating victims after an onslaught of lawsuits against them. Nearly 2,000 abuse claims have been filed in Ohio. Currently, the amount victims receive from the organization’s settlement depends on the length of the statute of limitations for civil claims in the state that they live in, as well as the length and severity of their abuse. The legislation voids the state’s current civil statute of limitations in bankruptcy cases, in an effort to ensure Ohio victims of Boy Scouts abuse get more compensation. By voiding Ohio’s existing cutoff of 12 years, the bill would ensure that any victim filing a claim receives all of the money they’re owed through the settlement, rather than a fraction of it.

Failed crypto lender BlockFi Inc. won bankruptcy court approval on its plan for shutting down its business, a milestone that could result in customers getting back a portion of what they’re owed by the end of the year, Bloomberg News reported. Bankruptcy Judge Michael Kaplan said during a hearing yesterday that he would approve BlockFi’s liquidation plan which was supported by a committee representing customer interests and creditors that voted to support it. Some BlockFi creditors are slated to receive partial repayment in Bitcoin or Ethereum, according to court documents. BlockFi unsecured creditors could get between roughly 35% to 63% of what they’re owed, according to an August court filing. The amount creditors ultimately receive hinges on whether BlockFi succeeds in litigation against FTX and other bankrupt crypto firms. BlockFi has said the outcome of its disputes with Sam Bankman-Fried’s platform and failed crypto hedge fund Three Arrows Capital could swing creditor recoveries by $1 billion. The liquidation plan was approved after BlockFi settled a dispute with the creditors committee over potential legal claims against the company’s senior management. BlockFi largely blamed its failure on FTX, which melted down last year amid allegations of fraud, while the committee alleged management ignored red flags before lending to Bankman-Fried’s platform.

In U.S. prosecutors' telling, Sam Bankman-Fried embezzled money from depositors in his FTX cryptocurrency exchange ever since he launched it in 2019, and the resulting shortfall led directly to its collapse as crypto prices swooned last year, Reuters reported. But in his own version and in explanations put forth by his lawyers, Bankman-Fried thought FTX, like a bank, could make investments with customers' money as long as they were able to withdraw it — and he did not know that actions taken by his closest colleagues had jeopardized the availability of funds. Over the course of six weeks starting on Oct. 3, a federal jury in Manhattan is due to weigh these dueling narratives during Bankman-Fried's criminal trial on fraud charges, before determining whether the 31-year-old former billionaire is guilty on seven counts of fraud and conspiracy. Bankman-Fried, who quit his job as a quantitative trader at Wall Street firm Jane Street to found crypto hedge fund Alameda Research in 2017, has pleaded not guilty.

The U.S. Securities and Exchange Commission said it has concerns about Coinbase Global Inc.’s proposed involvement in Celsius Network’s plan to emerge from bankruptcy, Bloomberg News reported. Under the proposed plan, Celsius agreed to engage Coinbase to distribute assets to international customers. In a filing on Friday, the SEC — which charged Coinbase earlier this year with operating as an unregistered securities exchange, broker and clearing house — said the agreements “go far beyond the services of a distribution agent, contemplating brokerage services and master trading services that implicate many of the concerns” raised in its suit. Celsius filed for bankruptcy protection in July 2022, and is working to emerge as a new user-owned company and distribute an estimated $2 billion of Bitcoin and Ether as part of the plan. Celsius wants to start fresh under new management led by investment firm Arrington Capital, part of a consortium called Fahrenheit LLC that won the crypto lender’s assets at a bankruptcy auction earlier this year.