Gemini, a prominent cryptocurrency exchange, has agreed to pay $50 million worth of digital assets to Gemini Earn investors as part of a settlement announced by the New York Attorney General (NYAG) on Friday. The settlement follows allegations from NYAG Letitia James that Gemini “misled thousands of investors,” including New Yorkers, about the risks associated with the Gemini Earn program.
Gemini Earn allowed customers to loan their crypto to the now-bankrupt Genesis Global Capital, LLC, with the promise of earning up to 7.4 percent annual percentage yield (APY). However, according to NYAG James, Gemini falsely marketed the program as a safe investment opportunity. “Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts,” James stated. “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.”
The settlement ensures “all defrauded investors full recovery of the assets they invested in the Earn program but were unable to withdraw when the investment program collapsed,” the NYAG said. Additionally, under the terms of the settlement, Gemini is banned from conducting any crypto lending programs within the state of New York.
The NYAG’s complaint, filed in October, targeted Gemini, crypto lending firm Genesis, and crypto investment company Digital Currency Group (DCG). The complaint accused Gemini of misleading investors by “repeatedly assuring” them that investing in the Earn program through Genesis was low risk, when in fact it was considerably risky. The NYAG also alleged that DCG, Genesis, and two executives “disguised $1.1 billion in losses through a months-long campaign of misstatements, omissions, and concealment.”
In a statement last month, Gemini indicated that Earn users would receive back $2.18 billion of their crypto in-kind, meaning customers who lent one bitcoin would receive one bitcoin back. This distribution represents a 232% recovery from when withdrawals were halted in November 2022. The exchange confirmed that “final Earn distributions” will be available in customers’ accounts within seven days.
Gemini expressed satisfaction with the settlement in a statement on Friday. “We are pleased to announce that in connection with the final Earn distribution, Gemini has entered into an agreement with the New York Attorney General (NYAG) to settle the lawsuit the NYAG brought against Gemini on October 19, 2023,” the statement read. “We are excited to deliver this full recovery to you and appreciate your ongoing patience and support throughout this process.”