The New York Attorney General’s office has reached a $50 million settlement with crypto exchange Gemini, resolving allegations that the platform “misled thousands of investors,” including New Yorkers, about the risks associated with its Gemini Earn program.
Gemini Earn Program and the Settlement
- Gemini Earn allowed customers to loan their crypto to the now-bankrupt Genesis Global Capital, LLC, in exchange for up to 7.4% APY.
- The New York Attorney General (NYAG) Letitia James said Gemini “lied and locked investors out of their accounts” by marketing Earn as a low-risk investment opportunity.
- Under the settlement, Gemini will pay $50 million worth of digital assets to Gemini Earn investors to make them whole, representing a 232% recovery from when withdrawals were halted in November 2022.
- Additionally, Gemini is banned from conducting any crypto lending program in the state of New York.
Allegations Against Gemini, Genesis, and DCG
- The NYAG previously filed a complaint against Gemini, crypto lending firm Genesis, and crypto investment company DCG, alleging they “disguised $1.1 billion in losses through a months-long campaign of misstatements, omissions, and concealment.”
- The NYAG claimed that Gemini repeatedly assured investors that the Earn program through Genesis was low-risk, when it was more risky.
Gemini’s Response
- Gemini said the final Earn distributions will be available in customers’ accounts within seven days, and they are “excited to deliver this full recovery” to investors.
- The exchange noted that the settlement with the NYAG marks the completion of the Earn program distribution process.
Implications and Lessons
- This settlement highlights the ongoing regulatory scrutiny and legal challenges faced by crypto companies, particularly around investor protection and transparency.
- It serves as a reminder for crypto platforms to be forthright about the risks associated with their products and services and to prioritize the interests of their customers.
- The resolution of the Gemini Earn case may also have broader implications for the crypto industry’s relationship with regulators and the need for stronger consumer safeguards.
