Gemini Agrees to $1.1 Billion Customer Refund and $37 Million Fine in Settlement with NYDFS

Gemini, a leading cryptocurrency exchange, has reached a significant settlement with the New York Department of Financial Services (NYDFS), agreeing to refund at least $1.1 billion to customers affected by its defunct lending program and pay a fine of $37 million for lapses in practices deemed unsafe and unsound.

The agreement stems from Gemini's Earn program, operated in collaboration with crypto lender Genesis Global Capital, which was abruptly halted amid a crypto market crash in November 2022. The fallout led to Genesis filing for bankruptcy, triggering extensive litigation between Genesis, Gemini, and Digital Currency Group (DCG), Genesis's parent company.

The settlement represents a crucial step toward providing relief to Gemini's Earn customers, who have been unable to access their funds since late 2022. NYDFS retains the right to pursue further action against Gemini if the company fails to fulfill its commitment to return the specified funds following the resolution of Genesis's bankruptcy.

Gemini has pledged to contribute $40 million to aid in concluding Genesis's bankruptcy proceedings, aimed at benefitting Earn customers, as outlined by the regulator.

The exchange, founded by Cameron and Tyler Winklevoss, popularly known as the Winklevoss twins, has faced scrutiny over its handling of the Earn program. NYDFS alleged Gemini's failure to conduct adequate due diligence on Genesis and maintain sufficient reserves throughout the program's operation.

NYDFS Superintendent Adrienne Harris emphasized the significance of the settlement in safeguarding Earn customers' rights, condemning Gemini's oversight of an unregulated third party that later faced accusations of substantial fraud, resulting in customer asset lockdown.

In response, Gemini expressed gratitude to NYDFS for its role in securing the settlement, acknowledging the ongoing efforts to advocate for Earn users and facilitate the return of their assets. The exchange emphasized its commitment to delivering a coin-for-coin recovery for affected customers, signaling a resolution to a protracted legal dispute.