Investment firm Gemini agrees to pay $50 million to the New York Attorney General
In a significant development, cryptocurrency firm Gemini Trust Co. has reached a settlement with the New York Attorney General's office, returning $50 million in digital assets to investors who were affected by the collapse of the Gemini Earn program.
The Earn program, which ran from February 2021 to November 2022, allowed investors to loan their crypto assets to Genesis Global Capital, earning interest in return. However, the program collapsed when Genesis Global Capital defaulted on roughly $1 billion in loans made to Earn customers, following the bankruptcy of FTX.
The Attorney General's investigation revealed that Gemini was aware of problems with Genesis' financials, including undersecured loans and concentration with FTX sister company Alameda Research. The settlement alleges that Gemini neglected to inform investors of these risks associated with the program.
The settlement requires Gemini to cooperate with the Attorney General's legal case against Genesis' parent company, Digital Currency Group, as well as against DCG CEO Barry Silbert and former CEO Soichiro Moro of Genesis.
The recovery is intended to pay 230,000 investors who were allegedly defrauded by Gemini's Earn program. The settlement gives full recovery to investors who were unable to withdraw from the program when it collapsed, and represents the final 3% of assets owed to Earn investors.
In a prepared statement, the Attorney General said that hundreds of thousands of people, including at least 29,000 New Yorkers, had their trust broken and their money swindled by Gemini through its Earn program. The settlement prohibits Gemini from operating a crypto lending company in New York.
Gemini tweeted on Friday that they are excited to deliver the full recovery to investors and appreciate their ongoing patience and support throughout the process. The settlement does not involve the purchase of any licensing rights.
The collapse of the Earn program and the subsequent bankruptcy of FTX sent shockwaves through the crypto world. This settlement marks a step towards restoring trust and compensation for affected investors.
