- Written by Peter Hoskins
- business reporter
image source, Getty Images
Tyler Winklevoss and Cameron Winklevoss
Cryptocurrency exchange Gemini has agreed to return at least $1.1 billion (£870 million) to customers of its defunct lending program as part of a settlement with the New York Department of Financial Services (NYDFS).
The company will also pay a $37 million fine for “material failures.”
Gemini's Earn program was suspended due to the crypto crash in November 2022.
NYDFS Director Adrian Harris said in a statement: “Gemini failed to conduct due diligence on unregulated third parties, later accused of massive fraud, and suddenly gained access to assets after the financial collapse of Genesis Global Capital. It has caused harm to Earn's customers who are no longer able to do so.”
“Today’s settlement is a victory for Arn customers who have rights to the assets they entrust to Gemini.”
NYDFS also said it may take further action against Gemini if it does not return at least $1.1 billion to customers.
“For the past 15 months, we have worked tirelessly to defend our earned users and seek the return of their assets,” Gemini said in a blog post.
“If approved, more than $1.8 billion in value (at current prices) would be returned, which is $700 million more than when Genesis suspended withdrawals on November 16, 2022.”
The company also announced that it will contribute $40 million to end Genesis' bankruptcy to benefit Arn's customers.
The Earn program was brought to you in partnership with cryptocurrency lender Genesis Global Capital.
It was suspended in November 2022, after which Genesis filed for bankruptcy. Since then, a major lawsuit has continued between Genesis, Gemini, and Genesis' parent company, Digital Currency Group.
Gemini Earn customers will no longer be able to access funds in these accounts starting in late 2022. This settlement means they are one step closer to getting their funds back.
Gemini is run by the Winklevoss twins, Tyler and Cameron, who are also known for their long-running legal dispute with Facebook and its boss Mark Zuckerberg.
Both companies were accused of violating the law by offering and selling products through Earn, which launched in 2021.
The U.S. Securities and Exchange Commission is handling the case.
