Gemini

2024

Cryptocurrency

Cryptocurrency exchange Gemini and New York State Department of Financial Services (NYDFS) have reached a settlement that will see Gemini return at least $1.1 billion to customers of the Gemini Earn Program through the Genesis bankruptcy proceeding.
Gemini will also pay a $37 million penalty for multiple compliance failures “that threatened the safety and soundness of the company,” Superintendent Adrienne A. Harris of the NYDFS <a href="https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202402282" target="_blank" rel="noopener noreferrer nofollow">explained </a>in a Feb. 28 statement.
<blockquote class="twitter-tweet">
 NEW: Superintendent Adrienne A. Harris Secures Commitment from Gemini Trust Company, LLC to Return at Least $1.1 Billion to Earn Program Customers More Here: <a href="https://t.co/QHIxcTDTJD" rel="noopener noreferrer nofollow">https://t.co/QHIxcTDTJD</a> <a href="https://t.co/Q2DFJmS8sH" rel="noopener noreferrer nofollow">pic.twitter.com/Q2DFJmS8sH</a>— NYDFS (@NYDFS) <a href="https://twitter.com/NYDFS/status/1762945530177474796?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">February 28, 2024</a>
</blockquote>
If approved by the bankruptcy court, Gemini <a href="https://www.gemini.com/earn" target="_blank" rel="noopener noreferrer nofollow">said</a> it expects Earn users to<a href="https://cointelegraph.com/news/gemini-creditors-revolt-over-brutal-bitcoin-slashing-reorg-plan" rel="noopener noreferrer nofollow"> receive 100% of their cryptocurrency assets</a> back plus appreciation on top of that.
“If approved, we will be returning over $1.8 billion in value (at today’s prices) — $700 million more than when Genesis halted withdrawals on November 16, 2022.”
Approximately 97% of these assets should be recoverable within about two months, Gemini added.
<blockquote class="twitter-tweet">
 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) <a href="https://twitter.com/GeminiTrustCo/status/1762954631150207226?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">February 28, 2024</a>
</blockquote>
As part of the agreement, Gemini agreed to contribute $40 million to the Genesis Global Capital (GGC) bankruptcy for the benefit of Earn customers, Harris revealed.
“Gemini failed to conduct due diligence on an unregulated third party, later accused of massive fraud, harming Earn customers who were suddenly unable to access their assets after Genesis Global Capital experienced a financial meltdown,” Harris said.
<blockquote>
 “Today’s settlement is a win for Earn customers, who have a right to the assets they entrusted to Gemini.”
</blockquote>
Harris noted the NYDFS could bring further action against Gemini if it fails to fulfill its obligations.
Related: <a href="https://cointelegraph.com/news/gemini-approved-operate-france-debut-within-weeks" rel="noopener noreferrer nofollow">Gemini approved to operate in France, will debut within weeks</a>
Gemini launched the Earn program in February 2021, where Earn customers loaned their coins to GGC (which Harris noted wasn’t licensed by NYDFS).
GGC then loaned those same assets to its own counterparties, where Earn customers received interest payments. However, GGC <a href="https://cointelegraph.com/news/crypto-lender-genesis-files-for-bankruptcy" rel="noopener noreferrer nofollow">went bankrupt in January 2023</a> and defaulted on approximately $1 billion worth of loans made by Earn customers.
NYDFS accused Gemini of not fully vetting or sufficiently monitoring GGC’s conduct throughout the life of Earn.
Magazine: <a href="https://cointelegraph.com/magazine/unstable-coins-de-pegging-bank-runs-other-risks-2023/" rel="noopener noreferrer nofollow">Unstablecoins: Depegging, bank runs and other risks loom</a>

Gemini to return at least $1.1B to Earn customers in settlement with NYDFS

Cointelegraph

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