Singapore – Cryptocurrency exchange Gemini Trust, founded by twins Cameron and Tyler Winklevoss, has reached a settlement with a New York regulator to refund at least $1.1 billion to customers of its defunct lending program. Along with the refund, Gemini will pay a $37 million fine for what the New York Department of Financial Services (NYDFS) deemed as “significant failures” jeopardizing the company’s stability.
The NYDFS reserves the right to take further action against Gemini if the company fails to meet its obligations as outlined in the settlement. Gemini, operated by the Winklevoss twins, gained notoriety for their legal battles with Meta’s Mark Zuckerberg over allegations of stealing their idea for Facebook, ultimately resulting in a $65 million settlement.
In a recent blog post, Gemini announced that customers of its lending program, Gemini Earn, will receive 100% of their digital assets back, along with any appreciation in value, due to the settlement. Gemini Earn promoted itself as a low-risk investment opportunity, promising interest payments as high as 8% by lending crypto assets to Genesis Global Capital (GGC), another firm.
The settlement will see over $1.8 billion in value returned to customers, a figure $700 million more than when GGC halted withdrawals in November 2022. The market turmoil followed the collapse of FTX, a prominent crypto exchange co-founded by Sam Bankman-Fried, who was convicted on multiple fraud and conspiracy charges in November.
Facing ongoing legal challenges, Gemini is also embroiled in a lawsuit filed by New York’s attorney general in October. The lawsuit accuses three companies, including Gemini, of deceiving investors and concealing over $1 billion in losses. Despite the settlement, Gemini’s legal troubles are far from over as they navigate through the complexities of the cryptocurrency industry.
As Gemini Trust moves forward with its settlement and returns funds to affected customers, the implications of its regulatory challenges highlight the growing scrutiny placed on cryptocurrency exchanges. The resolution of these issues will likely have far-reaching effects on how exchanges operate in an increasingly regulated market. Investors and industry observers will be closely monitoring the developments surrounding Gemini and other cryptocurrency firms entangled in legal disputes to gauge the impact on the broader crypto landscape.