Gemini Agrees to $1.1 Billion Refund in Landmark Settlement with NYDFS
Cryptocurrency exchange Gemini has entered into a historic settlement with the New York Department of Financial Services (NYDFS), agreeing to refund over $1.1 billion to customers impacted by its now-defunct lending program, Earn. The agreement also includes a fine of $37 million imposed on Gemini for unsafe and unsound practices during the operation of the Earn program.
Gemini’s Earn program, which was launched in partnership with crypto lender Genesis Global Capital, faced a significant setback during the crypto market crash in November 2022. The market dislocation resulted in Genesis filing for bankruptcy, triggering extensive legal disputes involving Genesis, Gemini, and Genesis’s parent company, Digital Currency Group (DCG).
As part of the settlement, Gemini has committed to refunding customers who have been unable to access their funds since late 2022, bringing them one step closer to recovering their assets. However, the NYDFS retains the right to pursue further action against Gemini if the company fails to fulfill its obligation to refund the stipulated amount following the resolution of Genesis’s bankruptcy.
In addition to the refund agreement, Gemini has pledged to contribute $40 million towards the conclusion of Genesis’s bankruptcy proceedings, with the aim of benefiting Earn customers affected by the program’s termination. This contribution underscores Gemini’s commitment to resolving the fallout from the Earn program’s closure and ensuring that affected customers are adequately compensated.
Gemini, founded and operated by Cameron and Tyler Winklevoss, also known as the Winklevoss twins, has been embroiled in legal battles surrounding the failure of its lending partnership with DCG. The joint venture, initiated in December 2020, allowed Gemini customers to lend their crypto assets to Genesis in exchange for interest, resulting in the accumulation of billions of dollars’ worth of crypto assets from investors.
The settlement with the NYDFS marks a significant milestone for Gemini and the broader cryptocurrency industry, emphasizing the importance of regulatory compliance and accountability in the evolving digital asset landscape. It also serves as a reminder of the challenges and risks inherent in crypto lending programs, highlighting the need for robust risk management practices and regulatory oversight to protect investor interests.
Gemini’s commitment to rectifying the situation and addressing the concerns of affected customers reflects its dedication to upholding transparency, integrity, and trust within the crypto community. Moving forward, stakeholders will closely monitor Gemini’s compliance efforts and the implementation of remedial measures to prevent similar incidents in the future, fostering a safer and more resilient ecosystem for cryptocurrency users worldwide.