Gemini Fined and Refunds Customers

Gemini agrees to settle with a New York regulatory agency, while also refunding $1.1 billion to customers of the Earn program.

Azcnews Breaking (22)

Gemini has agreed to pay a hefty $37 million fine to the New York financial regulatory agency. Additionally, the exchange will refund at least $1.1 billion to customers of the Gemini Earn program.

If approved by the bankruptcy court, Gemini Earn customers will receive “100% of their assets in equivalent form,” Gemini stated in a release on 28/02. This is highly positive news, especially when comparing the prices of Bitcoin (BTC) and Ethereum (ETH) at the time of deposit and when customers receive their assets back.

This is the latest development in the legal saga involving the lawsuit between the New York government – Gemini, Genesis, and parent company DCG – initiated in October 2023. The New York authorities accused these companies of defrauding 230,000 investors with over $1 billion.

The cause of the lawsuit related to Gemini

Gemini Vs Genesis

The controversy stemmed from Gemini Earn, a cryptocurrency savings product created by the Gemini exchange. They partnered with Genesis to provide lending services and generate interest on customer deposits, with annual returns of up to 7.4%.

Trouble arose after Genesis faced a crisis and filed for bankruptcy in January 2023, with debts totaling $3.5 billion. Genesis froze withdrawals and “locked up” assets of Gemini Earn users from November 2022 to date.

The trio seemed to have reached an initial bankruptcy agreement with creditors in February 2023, but it fell through. In July 2023, Gemini sued Genesis, DCG, and founder Barry Silbert, accusing them of fraud and misappropriating $1.2 billion in assets stuck at Genesis, then demanding the recovery of $1.6 billion in GBTC shares held as collateral for Earn. Genesis retaliated by suing Gemini, seeking to recover $689 million in funds withdrawn by the exchange before bankruptcy.

In another development, Genesis and Gemini strongly opposed allegations from the U.S. Securities and Exchange Commission (SEC) that Earn was essentially a disguised securities transaction. In May 2023, they requested the court to dismiss the legal dispute with the SEC.

Returning to the main topic of the article, today’s agreement is seen as a victory for Earn customers who entrusted their assets to Gemini.

The New York Department of Financial Services (NYDFS) hinted that they could be tougher if Gemini fails to refund the agreed $1.1 billion. Additionally, Gemini will contribute $40 million to the ongoing bankruptcy proceedings, NYDFS informed.

Related: Gemini Unveils New XRP Trading Product Amid Community Excitement

According to NYDFS statistics, the incident is causing significant damage to over 200,000 Earn customers, including nearly 30,000 from New York.

Earlier this month, Genesis also agreed to pay a $21 million fine, settling the lawsuit with the U.S. Securities and Exchange Commission. At that time, the SEC accused Gemini and Genesis of offering disguised securities and raising billions of dollars through the Earn program. The SEC also exposed Genesis’s lack of liquidity to meet customer withdrawal requests within a year.


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