Gemini to pay $50 million to defrauded investors

Gemini will make this payment as a settlement for a crypto fraud claim in New York. Gemini is also banned from operating lending programs in New York.

Letitia James, the New York Attorney General, announced that her office has successfully received $50 million from the crypto platform Gemini. This money will be used to reimburse investors who were by their Gemini Earn program.

The lawsuit claims that Gemini deceived investors out of over $3 billion. It references internal Gemini documents to argue that the exchange was aware of the “high risk” with the program.

“Hundreds of thousands of people, including at least 29,000 New Yorkers, had their trust broken and their money swindled by Gemini through its bogus Earn program,” said Attorney General James. “Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts. Today’s settlement will make defrauded investors whole and should remind cryptocurrency companies that deceiving investors is illegal and will not be tolerated by my office.”

Gemini will refund $50 million in digital assets to Gemini Earn investors who couldn’t access their accounts. These will be recoveries to more than 230,000 Earn investors. No action is required from investors to reclaim their digital assets.

Background

Gemini Earn offered attractive interest rates to investors who lent crypto to Genesis Global Capital, a unit of Digital Currency Group. Gemini charged agent fees of over 4% for this service.

In November 2022, Genesis suspended redemptions following the collapse of the FTX cryptocurrency exchange. Later, Genesis filed for Chapter 11 bankruptcy, leaving investors scrambling for their investments. 

Gemini is run by the billionaire twin brothers Cameron and Tyler Winklevoss.