Gemini, the cryptocurrency exchange co-founded by Cameron and Tyler Winklevoss, has reached an agreement with New York state regulators to settle allegations of offering unregistered securities. As part of the settlement, Gemini will reportedly return over $1 billion to customers who participated in its Earn program, which allowed users to lend their crypto holdings in exchange for interest. Additionally, Gemini will pay a $37 million fine to the New York State Attorney General's Office.
The Earn program, launched in 2021, was a key product for Gemini, attracting a significant amount of user investment. However, regulators in New York state argued that the program constituted the illegal sale of unregistered securities. The Attorney General's Office claimed that Gemini failed to register the program with the state and misled investors about the risks involved.
In a statement, Gemini emphasized its cooperation with the Attorney General's Office throughout the investigation and expressed its commitment to working with regulators to ensure compliance. The exchange also stated that it would be winding down the Earn program in New York state.
The settlement marks a significant development in the ongoing regulatory scrutiny of the cryptocurrency industry. Regulators around the world have been increasingly focused on bringing the industry under their purview, citing concerns about consumer protection, financial stability, and potential illegal activity.
The New York Attorney General's Office has been at the forefront of these efforts, taking action against several other cryptocurrency companies in recent years. The settlement with Gemini is likely to be seen as a precedent-setting case and could have wider implications for the cryptocurrency industry as a whole.
While the settlement resolves the immediate issue for Gemini, it remains to be seen how the exchange will move forward. The company will need to navigate the increasingly complex regulatory landscape and rebuild trust with investors who participated in the Earn program. The future of the Earn program itself also remains uncertain, as Gemini will no longer be able to offer it in New York state.