Gemini, the cryptocurrency startup owned by the Winklevoss twins, will have to return $1.1 billion to customers who lost money in their partnership with now-bankrupt cryptocurrency lending firm Genesis.
In a deal with the New York State Department of Financial Services, Gemini agreed to return funds lost by customers of its EARN program, where users can lend their cryptocurrencies to Genesis in exchange for interest payments.
According to the Department of Financial Services, Gemini “did not conduct full auditing or adequate monitoring.” [Genesis] Throughout Earn's life,” the company defaulted on its loans and then went bankrupt, leaving about 200,000 of Earn's customers empty-handed.
Adrienne Harris, DFS supervisor, said in a statement: “Gemini failed to conduct due diligence on an unregulated third party, and was later accused of widespread fraud, damaging Earn’s clients who were suddenly unable to access their assets after Genesis was hit by fraud.” Global Capital financial collapse. . “Today’s settlement is a win for Earn’s clients, who have rights to the assets they have entrusted to Gemini.”
in tweetGemini said it is “pleased to announce that we have finally reached a settlement in principle with Genesis and other creditors in the Genesis bankruptcy case that, if approved by the bankruptcy court, will result in all Earn users receiving 100% of their digital assets back in kind.”
Gemini will also pay $40 million in Genesis bankruptcy for Earn's clients, as well as a $37 million fine for “significant failures that threatened the safety and soundness of the company,” DFS said.
The SEC also charged Genesis and Gemini last year with the unregistered offer and sale of securities; Genesis settled half of the lawsuit for $21 million earlier this month.
There's no word on how all this affected the Winklevosses' cover band, Mars Junction.
