Gemini Agrees to $50 Million Settlement Over Gemini Earn Program Collapse
Crypto exchange Gemini has agreed to a $50 million settlement to resolve fraud claims related to the collapse of its lending program, Gemini Earn. This settlement comes amidst increased regulatory scrutiny of crypto-related lending programs in New York. Authorities state that the settlement aims to compensate defrauded investors and caution crypto firms about the risks of similar practices.
Gemini to Pay Investors $50 Million
Gemini will settle a lawsuit filed by New York’s Attorney General Letitia James, which accused the firm of misleading over 230,000 users of its Gemini Earn Program. According to the consent judgment disclosed on June 14, the company will pay approximately $50 million in restitution to affected users.
The agreement specifies that within seven days of the execution of the stipulation, Gemini will make complete restitution to Earn investors on a “coin-for-coin” basis. This means distributions will be made in the same amount and type of cryptocurrencies originally loaned by the investors.
The lawsuit, filed in October, alleged that Gemini failed to disclose the risks associated with Gemini Earn, falsely portraying it as a low-risk investment. Investigations revealed that the program had significant financial risks. Attorney General Letitia James stated that at least 29,000 New York residents were affected, and the settlement aims to restore investors’ trust and serve as a warning to other cryptocurrency companies.
According to the press release, investors will not need to take any action to access their cryptocurrencies, which will be returned to their accounts.
Banned from Operating in New York
In addition to the settlement, Gemini is prohibited from operating crypto lending programs in New York, either directly or indirectly. The consent judgment states:
“Gemini is permanently restrained and enjoined from directly or indirectly engaging in the lending of any cryptocurrency in the State of New York. Gemini certifies under penalties of perjury that it has ceased Gemini Earn and will not hereafter conduct or transact any business under Gemini Earn.”
Should future legislation permit crypto lending programs in New York, Gemini would need to seek permission from the Office of the Attorney General to waive compliance with this provision.
