Cryptocurrency exchange Gemini has promised to return $1.1 billion to customers as part of the settlement it reached with the New York Department of Financial Services (NYDFS). Gemini will also have to pay $37 million to NYDFS “due to significant failures that threatened the safety and soundness of the company.”
NYDFS claims that Gemini, owned by twins Tyler and Cameron Winklevoss, had “compliance, governance and internal audit issues” when it came to managing its Earn program. Launched in 2021, Gemini's Earn program allows customers to lend their cryptocurrencies to cryptocurrency brokerage Genesis Global Capital while receiving interest.
However, the NYDFS says Genesis “has not been fully vetted or adequately monitored by Gemini.” When Genesis defaulted on the loans in November 2022 and filed for bankruptcy last year, about 200,000 Gemini Earn customers were unable to access $1.1 billion (worth about $1.8 billion today) of funds.
In an update posted on its website, Gemini says that if the settlement is approved, it will result in “all EARN users receiving 100% of their digital assets in-kind.” The company says customers can expect to receive 97% of the assets in about two months, while the rest could arrive within the next year.
“We have worked tirelessly over the past 15 months to defend Earn users and seek to recover their assets,” says Gemini. “The ability to return assets on a coin-for-coin basis to our clients was critical to us.”
Gemini still faces a lawsuit from New York Attorney General Letitia James alleging that Gemini, Genesis and parent company Digital Currency Group “lied to investors and attempted to conceal losses of more than $1 billion.” However, James expanded the lawsuit earlier this month and now claims that the three companies' schemes resulted in losses amounting to $3 billion.
