Gemini’s $1 Billion Customer Refund in NYDFS Settlement
Gemini, under the leadership of the Winklevoss twins, has agreed to repay over $1 billion to its customers in a settlement with the New York Department of Financial Services (NYDFS), along with a $37 million fine.
This resolution follows accusations of inadequate due diligence and misleading representations in Gemini’s Earn program, which offered customers up to a 13% yield on lent cryptocurrencies. The Earn program faced a significant setback when its sole counterparty, Genesis Global Capital, defaulted on approximately $940 million worth of loans in November 2022, amidst a market downturn. NYDFS Superintendent Adrienne A. Harris emphasized Gemini’s failure to vet Genesis adequately, which left Earn customers unable to access their assets after Genesis experienced financial turmoil.
Beyond the Earn program, the NYDFS investigation uncovered broader issues within Gemini, including practices that undermined its financial stability and exposed customers to undue risk, particularly involving Gemini Liquidity, LLC. This settlement aligns with a previous $8 million settlement fine against Genesis Global Trading, which had to relinquish its New York state Bitlicense due to compliance lapses, as stated by the DFS superintendent.
Clever Robot News Desk 1st March 2024
