Gemini, the Winklevoss crypto company, will refund $1.1 billion to its customers

Gemini, a cryptocurrency exchange, has reached a settlement with the New York Department of Financial Services (NYDFS) to refund a minimum of $1.1 billion (£870 million) to customers affected by its discontinued lending program.

Gemini, the cryptocurrency exchange co-founded by Tyler and Cameron Winklevoss, has agreed to pay a $37 million fine for what regulators termed “significant failures.” This comes as part of a settlement following the suspension of Gemini’s Earn program during a crypto market crash in November 2022.

The New York Department of Financial Services (NYDFS) stated that Gemini neglected due diligence on an unregulated third party, which was later implicated in a large-scale fraud case. This failure resulted in harm to Earn customers who were unable to access their assets when Genesis Global Capital experienced financial turmoil.

NYDFS Superintendent Adrienne Harris emphasized that the settlement is a positive development for Earn customers, asserting their right to the assets entrusted to Gemini. Additionally, the NYDFS warned of further action if Gemini fails to return at least $1.1 billion to customers.

Gemini, in response, expressed its efforts to advocate for Earn users over the past 15 months and announced plans to return over $1.8 billion in value to customers, which exceeds the amount frozen when Genesis halted withdrawals.

The company also pledged $40 million to aid in the resolution of Genesis’ bankruptcy proceedings, aiming to benefit Earn customers affected by the program’s suspension.

Gemini’s Earn program, operated in collaboration with Genesis Global Capital, ceased operations in November 2022 following Genesis’ bankruptcy filing, leading to ongoing legal disputes among Genesis, Gemini, and Genesis’ parent company, Digital Currency Group. This settlement marks progress toward the eventual return of funds to Gemini Earn customers.

Gemini, headed by the Winklevoss twins, Tyler and Cameron, has been embroiled in legal issues previously, notably their longstanding legal feud with Facebook and its CEO, Mark Zuckerberg.

In January 2023, both Gemini and Genesis faced charges from US regulators for allegedly illegally selling crypto assets to hundreds of thousands of investors. The accusations focused on offerings made through the Earn program, which debuted in 2021. The US Securities and Exchange Commission is overseeing the case.

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