Gemini's $1.1 Billion Pledge: Cryptocurrency Exchange Settles with NYDFS

Cryptocurrency exchange Gemini, co-founded by the renowned Winklevoss twins, Tyler and Cameron, has reached a groundbreaking settlement with the New York Department of Financial Services (NYDFS).

In a move that underscores the challenges faced by the crypto industry, Gemini has committed to returning at least $1.1 billion to customers affected by the collapse of its Earn programme, alongside a substantial $37 million fine for what the NYDFS deems as "significant failures."

Defunct Lending Programme Unravels: A Crypto Crash Fallout

Gemini's Earn programme faced a sudden halt during the crypto market crash of November 2022, leaving customers in a state of financial uncertainty. The NYDFS alleges that Gemini failed to conduct due diligence on an unregulated third party, subsequently accused of massive fraud.

The aftermath saw Earn customers unable to access their assets following a financial meltdown at Genesis Global Capital, the lending program's partner.

NYDFS Victory: Advocating for Earn Customers

NYDFS Superintendent Adrienne Harris emphasized, "Today's settlement is a win for Earn customers, who have a right to the assets they entrusted to Gemini." The regulatory body warned of potential further action against Gemini if the promised $1.1 billion restitution to customers isn't fulfilled.

Gemini's Redemption Efforts: A $1.8 Billion Pledge

In a blog post, Gemini expressed its dedication to resolving the issue, stating, "If approved, we will be returning over $1.8 billion in value (at today's prices) — $700 million more than when Genesis halted withdrawals on November 16, 2022." The company also committed to contributing $40 million towards concluding Genesis' bankruptcy, aiming to benefit Earn customers caught in the crossfire of extensive litigation.

Genesis Fallout: Extensive Litigation and Customer Dilemma

The Earn programme, conducted in partnership with cryptocurrency lender Genesis Global Capital, ground to a halt in November 2022, leading to Genesis filing for bankruptcy.

Subsequently, ongoing legal battles unfolded involving Genesis, Gemini, and Genesis' parent company, Digital Currency Group. Gemini Earn customers, deprived of access to their funds since late 2022, can now anticipate a step closer to reclaiming their assets through this settlement.

Gemini's Troubled Past: From Facebook Feud to Regulatory Scrutiny

Run by the Winklevoss twins, Gemini has encountered not only the recent financial turmoil but also regulatory challenges. 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 case, overseen by the US Securities and Exchange Commission, adds another layer to Gemini's turbulent history, intertwining legal disputes with the legacy of its founders' feud with Facebook and Mark Zuckerberg.