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The Winklevoss twins in Singapore in September 2023.
CNN
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Gemini Trust, a cryptocurrency exchange founded by Cameron and Tyler Winklevoss, will return at least $1.1 billion to clients of its now-shuttered lending program, following a settlement with a New York regulator.
Gemini will also pay a $37 million fine to the regulator “due to significant failures that threaten the safety and soundness of the company,” the New York Department of Financial Services (NYDFS) said in a statement on Wednesday.
NYDFS has the right “to take further action against Gemini if the company does not meet its obligations,” it said in the statement.
Gemini is run by the Winklevoss twins, who famously spent years in lawsuits accusing Mark Zuckerberg of Meta (META) of stealing their idea for Facebook and eventually won a $65 million settlement.
In a blog post on Wednesday, the cryptocurrency exchange said that because of the settlement, customers of its lending program, Gemini Earn, will receive 100% of their digital assets in kind plus any appreciation in value.
Gemini Earn marketed itself as a low-risk investment where customers could lend their cryptocurrency assets to another company, Genesis Global Capital (GGC), while receiving interest payments of up to 8%.
“We will return over $1.8 billion in value (at today’s prices),” Gemini said, which it said was $700 million more than when GGC halted withdrawals in November 2022.
That was when the trillion-dollar cryptocurrency market collapsed, due to the collapse of FTX, the once high-flying cryptocurrency exchange. Sam Bankman Fried, one of its founders, was convicted in November of seven counts of fraud and conspiracy for his role in the company's collapse.
On Tuesday, Bankman-Fried's attorneys filed a memorandum in federal court in Manhattan recommending a prison sentence of five to six-and-a-half years. Under federal guidelines, he could face a maximum sentence of 110 years. He is scheduled to be sentenced on March 28.
Wednesday's settlement doesn't mean Gemini's legal troubles are over. It faces a separate lawsuit filed by the New York Attorney General in October accusing three companies — Gemini, GCC, and Digital Currency Group, GCC's parent company — of lying to investors and covering up losses of more than $1 billion.
