Cryptocurrency exchange Gemini has settled with the New York Department of Financial Services (NYDFS), agreeing to reimburse at least $1.1 billion to customers impacted by its discontinued lending program, as reported by Reuters.
As part of the settlement, Gemini will also pay a fine of $37 million for practices deemed unsafe and unsound by the regulator.
The resolution signifies progress in addressing concerns surrounding Gemini’s Earn program, which was halted amid a cryptocurrency market crash in November 2022, leading to bankruptcy filings by partner firm Genesis Global Capital. NYDFS emphasized that the settlement aimed to ensure the swift return of funds to affected Gemini customers.
The regulator retained the authority to pursue further action against Gemini if the company fails to fulfill its obligation of reimbursing customers after the resolution of Genesis’ bankruptcy proceedings.
Gemini has pledged to contribute $40 million toward finalizing Genesis’ bankruptcy, aiming to benefit Earn program participants.
Gemini’s Earn program, created in collaboration with Genesis Global Capital, allowed customers to earn interest by loaning their cryptocurrency assets. However, the program’s termination during market volatility left customers unable to access their funds, resulting in legal disputes among Genesis, Gemini, and Genesis’s parent company, Digital Currency Group.
NYDFS criticized Gemini’s inadequate due diligence on Genesis, highlighting the impact on Earn program participants amid Genesis’s financial instability.
NYDFS Superintendent Adrienne Harris denounced Gemini’s due diligence lapses, citing the harm inflicted on Earn program participants due to Genesis Global Capital’s collapse.
Harris hailed the settlement as a win for affected customers, affirming their entitlement to retrieve assets entrusted to Gemini.
Meanwhile, Gemini expressed appreciation to NYDFS for facilitating the settlement, underscoring its efforts to advocate for the recovery of assets for Earn users.
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