- Gemini has reached a settlement with the NYAG.
- The NYAG alleged the firm and its collaborators defrauded investors for over $3 billion.
- The settlement will let Gemini off the hook while making customers whole.
In October 2023, defunct crypto lender Genesis and crypto exchange Gemini found themselves in the crosshairs of a sweeping lawsuit by the New York Attorney General (NYAG). The lawsuit alleged that the firm and its collaborators jointly defrauded investors for over $3 billion with the “Gemini Earn” program, a crypto lending service advertised as low-risk.
In a positive development, the defunct crypto exchange Gemini has reached a settlement as it moves to clear its name and settle its debts.
Gemini Reaches Settlement With NYAG Office
On Friday, June 14, Gemini agreed to pay $50 million in digital assets to Gemini Earn investors as part of a settlement announced by the NYAG’s office.
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The settlement follows NYAG Letitia James’ allegations that Gemini “misled thousands of investors” on risks tied to the Gemini Earn program. Gemini Earn allowed Gemini customers to loan their crypto to now-bankrupt Genesis Global Capital, LLC, and earn up to 7.4 percent APY.
“Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts,” James said in a statement on Friday.
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“Today’s settlement will make defrauded investors whole and should remind cryptocurrency companies that deceiving investors is illegal and will not be tolerated by my office,” James added.
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According to James, the settlement will ensure all defrauded investors fully recover the assets they invested in the Earn program but could not withdraw when it collapsed. Additionally, Gemini will be banned from conducting any future crypto lending program in the state.
The agreement will also let Genesis and Gemini off the hook without admitting liability despite denying wrongdoing.
On the Flipside
- In April, Gemini announced that Earn users would receive $2.18 billion of their crypto in-kind, meaning customers who lent one bitcoin will get one bitcoin back.
- Digital Currency Group (DCG) repeatedly challenged Genesis and Gemini’s settlement plan, raising concerns over the firm’s decision to pay back customers in kind instead of in cash based on the bankruptcy date.
Why This Matters
The settlement represents a significant milestone for Gemini and its users, marking a crucial juncture in the company’s efforts to navigate bankruptcy proceedings and its commitment to providing restitution to those affected by the Earn Program.
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