Gemini Settles with New York Attorney General, Agrees to Pay $50 Million
Crypto exchange Gemini has reached a settlement with the New York Attorney General (NYAG) and agreed to pay $50 million worth of digital assets to investors of its Gemini Earn program.
The settlement follows allegations made by NYAG Letitia James that Gemini “misled thousands of investors,” including residents of New York, regarding the risks associated with the program, according to an official announcement.
Gemini Earn allowed customers to lend their cryptocurrencies to Genesis Global Capital, LLC, with the promise of earning up to 7.4 percent annual percentage yield (APY).
However, according to the NYAG, Gemini falsely marketed the program and locked investors out of their accounts.
“Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts,” Letitia James said.
“Today’s settlement will make defrauded investors whole and should remind cryptocurrency companies that deceiving investors is illegal and will not be tolerated by my office.”
All Gemini Investors to Receive Full Recovery
As part of the settlement, all investors who were unable to withdraw their funds when the investment program collapsed will receive full recovery of their invested assets.
Additionally, Gemini is prohibited from conducting any crypto lending programs in the state of New York.
The NYAG initially filed a complaint in October against Gemini, along with Genesis and Digital Currency Group (DCG).
The complaint alleged that Gemini misled investors and made false assurances about the low risk associated with investing in the Earn program through Genesis.
The NYAG also accused DCG, Genesis, and two executives of concealing $1.1 billion in losses through a campaign of misstatements and omissions.
Gemini recently announced that Earn users would receive $2.18 billion worth of their cryptocurrencies in-kind, meaning they would be refunded with the same digital assets they had initially invested.
According to Gemini, these distributions represent a 232% recovery from the time when withdrawals were halted in November 2022.
Gemini assured customers that the final Earn distributions would be available in their accounts within seven days.
Gemini to Distribute Over $2B Among Earn Users
In late May, Gemini announced the full recovery of digital assets for its Earn program users.
The recovery plan includes a $1.1 billion settlement. It ensures that users will receive the entirety of their assets, potentially exceeding the initial value due to asset appreciation during the holding period.
The distributions also represent a 232% recovery from when withdrawals were halted in November 2022.
Gemini offered an optional program called Earn, where customers could lend their crypto holdings to the company for interest.
Launched in early 2021 with Genesis, the program promised a return of 7.4% on deposits.
However, Gemini was forced to shut down Earn in Jan. 2023 after Genesis failed to repay over $900m in assets owed to Gemini.
