Gemini, a prominent cryptocurrency exchange, has reached a settlement with New York regulators to resolve a fraud claim connected to its now-defunct "Gemini Earn" program. The agreement will see Gemini return $50 million worth of digital assets to investors who were left unable to access their funds when the program collapsed.
This move comes after months of legal wrangling. Last October, both Gemini and its lending partner, Genesis Global Capital (Genesis), were hit with a lawsuit from New York Attorney General Letitia James. The lawsuit alleged that the companies had defrauded thousands of investors out of a staggering $1. 1 billion. In May of this year, that figure ballooned to $3 billion as the investigation expanded.
As part of the settlement, Gemini will also be prohibited from operating a crypto lending program within the state of New York. This effectively shuts down the "Gemini Earn" program within New York's borders. The program, which launched in 2021, promised investors high interest rates in exchange for lending their cryptocurrency holdings. However, when Genesis faced financial difficulties in November 2022, it defaulted on loans, leaving "Gemini Earn" users locked out of their accounts.
While the settlement provides some relief for affected investors, it doesn't mark the complete end of the saga. The lawsuit against Genesis remains ongoing, with the bankrupt firm neither admitting nor denying the allegations. Additionally, the legal battle against Gemini's co-founders, Tyler and Cameron Winklevoss, and Genesis' former CEO, Soichiro Moro, continues.
The Gemini settlement underscores the ongoing scrutiny faced by the cryptocurrency industry, particularly concerning lending programs. Regulators across the globe are increasingly focused on establishing clear rules and ensuring investor protection in this volatile market.