Gemini to pay $50 million to defrauded investors

Gemini will make this payment in settlement of a crypto fraud claim in New York. Gemini was also banned from operating loan programs in New York.

New York Attorney General Letitia James announced that her office has successfully received $50 million from crypto platform Gemini. This money will be used to pay back investors who participated in the Gemini Earn program.

The lawsuit alleges that Gemini defrauded investors of more than $3 billion. Internal Gemini documents are cited to claim that the exchange was aware of the “high risk” in the program.

“Hundreds of thousands of people, including at least 29,000 New Yorkers, had their trust broken and their money defrauded by Gemini through its fraudulent Earnings program,” said Attorney General James. “Gemini marketed its Earnings program as a way for investors to grow their money, but actually lied and locked investors out of their accounts. “Today’s settlement will make defrauded investors whole and remind cryptocurrency companies that defrauding investors is illegal and will not be tolerated by my office.”

Gemini will refund $50 million in digital assets to Gemini Earn investors who cannot access their accounts. These will be the rescue of more than 230,000 Earn investors. No action is required for investors to claim back their digital assets.

Background

Gemini Earn offered attractive interest rates to investors who made crypto loans to Genesis Global Capital, a unit of Digital Currency Group. Gemini charged over 4% agency fee for this service.

In November 2022, Genesis suspended payments following the collapse of the FTX cryptocurrency exchange. Genesis then filed for Chapter 11 bankruptcy and investors scrambled for their investments.

Gemini is run by billionaire twin brothers Cameron and Tyler Winklevoss.