Crypto exchange Gemini agreed to pay $50 million worth of digital assets to Gemini Earn investors as part of a settlement announced by the New York Attorney General on Friday.
The settlement comes after NYAG Letitia James said Gemini "misled thousands of investors," including New Yorkers, on risks tied to the Gemini Earn program. Gemini Earn allowed Gemini customers to loan their crypto to now-bankrupt Genesis Global Capital, LLC, and earn up to 7.4 percent APY.
“Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts," James said in a statement on Friday. "Today’s settlement will make defrauded investors whole and should remind cryptocurrency companies that deceiving investors is illegal and will not be tolerated by my office.”
The settlement allows "all defrauded investors full recovery of the assets they invested in the Earn program but were unable to withdraw when the investment program collapsed," the NYAG said. Under the agreement, Gemini is also banned from conducting any crypto lending program in the state.
The NYAG filed its complaint in October against Gemini, crypto lending firm Genesis and crypto investment company DCG. James said Gemini lied to investors and "repeatedly assured investors" that investing in the Earn program through Genesis was low risk when it was more risky. Meanwhile, DCG, Genesis and two executives ""disguised $1.1 billion in losses through a months-long campaign of misstatements, omissions, and concealment," the NYAG previously said.
Gemini said last month that Earn users would get back $2.18 billion of their crypto in-kind, meaning customers who lent one bitcoin will receive one bitcoin back. The distributions also represent a 232% recovery from when withdrawals were halted in November 2022, Gemini said.
The exchange said "final Earn distributions" will be available in customers' accounts within seven days, Gemini said in a statement on Friday.
"We are also pleased to announce that in connection with the final Earn distribution, Gemini has entered into an agreement with the New York Attorney General (NYAG) to settle the lawsuit the NYAG brought against Gemini on October 19, 2023," Gemini said in the statement. "We are excited to deliver this full recovery to you and appreciate your ongoing patience and support throughout this process."
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© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Crypto exchange Gemini to pay $50 million in settlement with NY attorney general's office - The Block
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