Cryptocurrency exchange Gemini has agreed to a landmark settlement with the New York State Department of Financial Services (NYDFS), promising to return at least $1.1 billion to customers affected by the Genesis bankruptcy.
The Road to Restitution: Gemini’s Pledge to Earn Customers
In a bid to rectify compliance failures and ensure customer protection, Gemini commits to reimbursing Earn program participants and paying a $37 million penalty to the NYDFS.
Gemini revealed that approximately 97% of the assets owed to customers will be recoverable within the next two months, with efforts to secure the remaining balance within the following year.
As part of the agreement, Gemini will allocate $40 million to the Genesis Global Capital (GGC) bankruptcy, aiming to benefit Earn customers and address the fallout from GGC’s financial collapse.
Earn Update: Today, we are pleased to announce 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…
— GeminiTrustCo (@GeminiTrustCo) February 28, 2024
The Fallout: Gemini’s Compliance Lapses and Customer Impact
Superintendent Adrienne A. Harris of the NYDFS highlighted Gemini’s failure to conduct adequate due diligence on GGC, leading to significant repercussions for Earn customers when GGC faced financial turmoil.
Harris emphasized that today’s settlement is a crucial step towards restoring trust and accountability in the cryptocurrency ecosystem, particularly for Earn customers who were left unable to access their assets amid the Genesis bankruptcy.
Gemini’s Earn program, launched in February 2021, aimed to provide customers with interest payments by loaning their assets to GGC. However, the collapse of GGC in January 2023 resulted in substantial losses for Earn participants, highlighting the risks associated with unregulated third-party partnerships.
NYDFS cautioned that further regulatory action could be taken against Gemini if it fails to uphold its obligations outlined in the settlement, underscoring the importance of compliance and consumer protection in the evolving landscape of cryptocurrency exchanges.
Also Read: Genesis, a cryptocurrency lender, allegedly owes clients of Gemini $900 million.
