Cryptocurrency exchange Gemini has agreed to return at least $1.1bn to customers of its defunct lending programme, following a settlement.
Co-founded by twins Tyler and Cameron Winklevoss, the company faced allegations from US regulators for unlawfully selling cryptocurrency assets to hundreds of thousands of investors. In the most recent update, Gemini has reached a settlement with the New York Department of Financial Services (NYDFS), agreeing to reimburse customers’ funds.
In a statement, NYDFS said: “Gemini failed to conduct due diligence on an unregulated third party, later accused of massive fraud, harming Earn customers who were suddenly unable to access their assets after Genesis Global Capital experienced a financial meltdown.”
The Earn programme was offered in partnership with cryptocurrency lender Genesis Global Capital. However, in November 2022, Genesis declared bankruptcy and since then there has been extensive legal action between Genesis, Gemini, and Genesis’ parent company, Digital Currency Group.
Due to this, Earn customers have been unable to access their funds since late 2022, which led to Gemini and Genesis being charged by US regulators with illegally selling crypto assets to hundreds of thousands of investors.
“Today’s settlement is a win for Earn customers, who have a right to the assets they entrusted to Gemini,” stated the NYDFS.
The regulator also added that it may take additional measures against Gemini if the exchange failed to return at least $1.1 billion to its customers.
In a blog post, titled ‘Announcing The Successful Resolution of Earn’, the firm said: “Today, we shared with Earn users that we have finally reached a settlement in principle with Genesis and other creditors in the Genesis Bankruptcy that will, if approved by the Bankruptcy Court, result in all Earn users receiving 100% of their digital assets back in kind.
“This means, for example, that if you had lent one bitcoin in the Earn program, you will receive one bitcoin back. And it means that you will receive any and all appreciation of your assets since you lent them into the Earn program. If approved, we will be returning over $1.8bn in value (at today’s prices) – $700m more than when Genesis halted withdrawals on 16 November, 2022.”
Additionally, the company also announced its intention to contribute $40m towards resolving Genesis’ bankruptcy proceedings, with the aim of further benefiting Earn customers.
