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Winklevoss-based cryptocurrency firm Gemini will return $1.1 billion to customers
- By Peter Hoskins
- Business journalist
February 29, 2024
Image source, Getty Images
Image caption, Tyler Winklevoss and Cameron Winklevoss
Cryptocurrency exchange Gemini has agreed to return at least $1.1 billion (£870 million) to customers of its defunct lending program as part of a settlement with the New York Department of Financial Services (NYDFS).
The company will also pay a $37 million fine for “significant failures.”
Gemini’s Earn program was shut down during a cryptocurrency crash in November 2022.
“Gemini failed to conduct due diligence on an unregulated third party, later accused of massive fraud, harming Earn clients who were suddenly unable to access their assets after Genesis Global Capital suffered a meltdown financial,” NYDFS Superintendent Adrienne Harris said in a statement.
“Today’s settlement is a win for Earn customers, who are entitled to the assets they entrusted to Gemini.”
The NYDFS also said it may take further action against Gemini if it does not return at least $1.1 billion to customers.
In a blog post Gemini said had “worked tirelessly over the past 15 months to advocate for Earn users and seek the return of their assets.”
“If approved, we will return over $1.8 billion in value (at today’s prices) – $700 million more than when Genesis stopped withdrawals on November 16, 2022.”
The company also said it will contribute $40 million to the resolution of Genesis’ bankruptcy to benefit Earn’s customers.
The Earn program was offered in partnership with cryptocurrency lender Genesis Global Capital.
It was discontinued in November 2022, followed by Genesis declares bankruptcy. Since then there has been extensive litigation between Genesis, Gemini, and Genesis’ parent company, Digital Currency Group.
Gemini Earn customers have been unable to access their funds in those accounts since late 2022. The settlement means they are one step closer to getting their money back.
Gemini is run by the Winklevoss twins, Tyler and Cameron, also known for a long-running legal dispute with Facebook and its boss Mark Zuckerberg.
The companies were accused of breaking the law by offering and selling the products through Earn, which launched in 2021.
The US Securities and Exchange Commission is dealing with the case.