Cryptocurrency exchange Gemini has promised to refund $1.1 billion to customers as part of a settlement with the New York Department of Financial Services (NYDFS). Gemini will also have to pay NYDFS $37 million “for material failures that jeopardized the safety and soundness of the company.”
NYDFS alleges that Gemini, owned by twins Tyler and Cameron Winklevoss, had “compliance, management, and internal audit issues” with its management of the Earn program. Gemini's Earn program, introduced in 2021, allows customers to lend cryptocurrencies to crypto brokerage firm Genesis Global Capital while receiving interest.
However, NYDFS said Genesis “was not adequately reviewed or adequately monitored by Gemini.” When Genesis defaulted on a loan in November 2022 and filed for bankruptcy last year, about 200,000 Gemini Earn customers were left without access to $1.1 billion (about $1.8 billion in today's dollars) in funds.
In an update published on its website, Gemini said that if the settlement is approved, “all earn users will receive 100% of their digital assets in kind.” The company says customers will receive 97% of their assets within about two months, with the remainder likely within the next year.
“We have worked tirelessly over the past 15 months to advocate for Earn users and seek the return of their assets,” Gemini said. “Being able to return assets to customers coin by coin was very important to us.”
Gemini is currently facing a lawsuit from New York State Attorney General Letitia James alleging that Gemini, Genesis, and Genesis' parent company Digital Currency Group “lied to investors and attempted to hide more than $1 billion in losses.” is also happening. But James expanded his lawsuit earlier this month and now claims the three companies' scheme has caused losses worth $3 billion.
