New York recovers $50 million for defrauded Gemini Earn crypto investors

By Jonathan Stempel

NEW YORK (Reuters) – New York Attorney General Letitia James said on Friday that her office had recovered $50 million from cryptocurrency platform Gemini Trust to repay investors defrauded in its Gemini Earn program.

James said Gemini, run by billionaire twin brothers Cameron and Tyler Winklevoss, would provide full bailouts to more than 230,000 Earn investors, including 29,000 in New York, and agreed to a ban on the operation of crypto lending programs in the state.

“Gemini marketed its Earnings program as a way for investors to grow their money, but actually lied and locked investors out of their accounts,” James said. “Today’s agreement will make defrauded investors whole.”

Gemini Earn promised high interest rates to investors who loaned crypto assets like Bitcoin to crypto lender Genesis Global Capital, a unit of Digital Currency Group, and Gemini charged agency fees that could exceed 4%.

Shortly after the collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange, investors’ money was frozen when Genesis halted redemptions in November 2022. Genesis filed for Chapter 11 bankruptcy two months later.

Friday’s payment is in addition to the $2 billion deal James announced with Genesis on May 20.

Gemini said Gemini Earn investors will get back more than they invested because they will be paid out in digital assets such as Bitcoin, which has more than tripled in value since the payments were suspended.

Gemini also agreed to cooperate in the fraud lawsuit it filed against Digital Currency Group and its CEO Barry Silbert in October, James said. They said his claims were unfounded.

Forbes magazine said the Winklevoss twins are worth $2.7 billion each.

(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)