Gemini to Fully Reimburse Earn Program Customers while Paying Additional $37 Million Fine in Settlement with NYDFS

The New York State Department of Financial Services (NYDFS) announced today that it has reached a settlement with the cryptocurrency exchange Gemini (Gemini Trust Company, LLC). Gemini has committed to refund at least $1.1 billion to customers of the Gemini Earn program and has agreed to pay a fine of $37 million. Gemini also announced today that it has reached a settlement with the bankrupt cryptocurrency lending institution Genesis. If the bankruptcy plan of Genesis is approved by the court, Gemini will fully return the physical cryptocurrency to Earn customers. Gemini, founded by the Winklevoss twins Cameron and Tyler Winklevoss, has launched the Gemini Earn program in February 2021, allowing customers to lend cryptocurrencies to Genesis and earn an annual interest rate of 7.4%. However, Genesis, which suffered from a liquidity crisis triggered by the collapse of three major companies in February 2022, filed for bankruptcy in January 2023, causing significant losses to over 200,000 Gemini Earn customers. As the largest creditor in the Genesis bankruptcy case, Gemini has been in dispute with Genesis and its parent company Digital Currency Group (DCG). In August of last year, Gemini even sued DCG and its CEO Barry Silbert for fraud. In October of last year, Gemini, Genesis, and DCG were sued by the New York Attorney General’s Office, accusing them of defrauding over 230,000 investors, involving nearly $1.1 billion. According to Gemini, if the bankruptcy plan of Genesis is approved, Earn users are expected to receive approximately 97% of the physical assets within about two months and the remaining balance within the next 12 months. The company added that the required bankruptcy court procedures may take up to two months to complete, and they will keep Earn users updated during this process. However, it should be noted that there are still variables as to whether Genesis’ bankruptcy plan will be approved by the court, as DCG, the parent company, only expressed its opposition to the repayment plan to the court earlier this month, insisting that the amount Genesis repays to customers and creditors should not exceed the value of the cryptocurrency at the time of Genesis’ bankruptcy filing in January 2023.