Gemini to Repay $1.1 Billion to Users After Regulatory Settlement

In a landmark settlement with the New York Department of Financial Services (NYDFS), Gemini Trust has committed to reimbursing at least $1.1 billion to clients of its now-defunct lending program.

by Faruk Imamovic
SHARE
Gemini to Repay $1.1 Billion to Users After Regulatory Settlement
© Getty Images/Joe Raedle

In a landmark settlement with the New York Department of Financial Services (NYDFS), Gemini Trust, the cryptocurrency exchange founded by Cameron and Tyler Winklevoss, has committed to reimbursing at least $1.1 billion to clients of its now-defunct lending program.

This agreement comes alongside a $37 million fine imposed on Gemini for what the NYDFS described as "significant failures" compromising the company's integrity and security.

Restitution and Regulatory Oversight

Under the terms of the settlement, Gemini has pledged to return the entirety of digital assets to customers of its Gemini Earn program, with the addition of any accrued value.

The Gemini Earn initiative had promised users the opportunity to lend their cryptocurrency holdings to another firm, Genesis Global Capital (GGC), in exchange for interest payments of up to 8%. However, the program came to an abrupt halt in November 2022 amid a broader collapse within the trillion-dollar cryptocurrency market, precipitated by the downfall of FTX, another major crypto exchange.

The NYDFS has reserved the right to take further action against Gemini should the company fail to meet its obligations under the settlement. This stipulation underscores the regulatory body's commitment to enforcing compliance and protecting consumer interests in the rapidly evolving crypto landscape.

A Tumultuous Period for the Crypto World

The settlement arrives during a tumultuous period for the cryptocurrency industry, marked by the spectacular collapse of FTX and the subsequent legal battles facing its co-founder, Sam Bankman-Fried.

Convicted on multiple counts of fraud and conspiracy, Bankman-Fried's potential sentencing looms, with recommendations suggesting a prison term of five to six-and-a-half years, against a backdrop of possible maximum sentences amounting to 110 years.

Furthermore, Gemini's legal troubles are far from resolved. The company, alongside Genesis Global Capital and Digital Currency Group (the parent company of GGC), faces a separate lawsuit by New York's attorney general. The suit accuses the trio of deceiving investors and concealing over $1 billion in losses, highlighting the broader issues of transparency and accountability within the cryptocurrency industry.

New York
SHARE