Gemini agrees to return $1.1 billion to Earn customers as part of NYDFS settlement Gemini agrees to return $1.1 billion to Earn customers as part of NYDFS settlement
Gemini has also agreed to pay a $38 million fine and to contribute $40 million towards the Genesis bankruptcy proceedings.
2 min read
Updated: Feb. 28, 2024 at 10:49 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The New York State Department of Financial Services (NYDFS) reached a settlement agreement with Winklevoss-owned crypto exchange Gemini.
The NYDFS announced the settlement in a press release published on Feb. 28. The regulator said that Gemini failed to protect its customers adequately and had multiple compliance issues.
Superintendent Adrienne Harris said:
“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.”
Settlement terms
The agreement mandates Gemini to return at least $1.1 billion to customers of its Earn Program following findings that the exchange failed to adequately oversee operations with Genesis, a third party implicated in the alleged fraud.
As part of the settlement, Gemini has also agreed to contribute $40 million towards the Genesis bankruptcy proceedings, which will benefit Earn Program customers directly.
Additionally, the exchange will pay a $37 million penalty to the NYDFS for several compliance failures, highlighting the regulatory body’s effort to enforce strict adherence to financial regulations within the crypto sector.
This settlement comes amid broader regulatory actions targeting crypto lending programs. However, it ends a long-running legal saga and ensures a favorable conclusion for customers.
Legal troubles
In January 2023, the SEC charged both Genesis and Gemini for the unregistered offer and sale of securities through the Gemini Earn program, which involved raising billions from investors without necessary registrations.
The two companies were also sued by the New York Attorney General’s Office over the Earn program and allegations of fraud. The lawsuit also included Genesis parent Digital Currency Group and its CEO Barry Silbert.
Genesis has since settled both the SEC and the NYAG lawsuits. It also recently paid an $8 million penalty and surrendered its BitLicense due to compliance failures identified by NYDFS, although these issues were not directly related to the Earn program.
Gemini has yet to announce any developments in the SEC and NYAG cases.
Mentioned in this article
Author 
Assad Jafri
AJ, a passionate journalist since Yemen's 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
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In this article
Gemini
Gemini is a regulated digital asset exchange and custodian that allows customers to buy, sell, store, and stake digital assets in a regulated, secure, and compliant manner.
Genesis
Genesis is an institutional digital asset markets and a full-service digital currency prime brokerageย providing a single point of access for select qualified individuals and global institutional investors.
Digital Currency Group
Digital Currency Group’s mission is to accelerate the development of a better financial system.
Barry Silbert, recognized as a foundational figure in the cryptocurrency landscape, serves as the CEO and founder of Digital Currency Group (DCG).
Cameron Winklevoss, a renowned figure in the cryptocurrency sector, is a Harvard University graduate with a degree in Economics and holds an MBA from Oxford University.
Tyler Winklevoss, known for his pioneering role in the cryptocurrency realm, is a Harvard University alumnus with a degree in Economics and holds an MBA from Oxford University.