New York Attorney General Letitia James announced the recovery of $50 million from Gemini Trust, a cryptocurrency platform, to reimburse investors defrauded by its Gemini Earn program. This initiative will provide full recoveries to over 230,000 Earn investors, including 29,000 in New York, and bans Gemini from operating crypto lending programs in the state.
Settlement Details
- Attorney General’s Statement: Letitia James emphasized that Gemini misled investors by marketing its Earn program as a profitable investment opportunity while actually restricting access to their accounts. “Today’s settlement will make defrauded investors whole,” James said.
- Investor Reimbursements: The funds will be accessible within seven days, with Gemini informing investors that this final distribution ensures Earn users receive 100% of the assets owed to them.
Additional Settlements
- Genesis Global Capital Settlement: This $50 million recovery is in addition to a related $2 billion settlement with crypto lender Genesis Global Capital announced on May 20. Genesis halted redemptions in November 2022 following the collapse of FTX and subsequently filed for Chapter 11 bankruptcy in January.
- Compliance Penalties: In February, New York’s top financial regulator fined Gemini $37 million for compliance failures.
Gemini Earn Program Issues
Gemini Earn promised high interest rates to investors who lent crypto assets such as bitcoin to Genesis, with Gemini taking fees that could exceed 4%. More than $1 billion was frozen when Genesis suspended redemptions. Despite the settlement, Gemini did not admit or deny wrongdoing.
Future Cooperation and Legal Actions
- Digital Assets Repayment: Investors are expected to recover more than their initial investments as they will be compensated in digital assets, whose values have significantly increased since the redemption suspension.
- Ongoing Legal Cooperation: Gemini agreed to cooperate in Attorney General James’ ongoing fraud lawsuit against Digital Currency Group and its CEO, Barry Silbert, who have dismissed the claims as baseless.
This recovery marks a significant step towards restoring investor confidence and ensuring accountability within the cryptocurrency industry. Stay tuned for further updates on this ongoing legal saga.