Recently, the New York Attorney General’s office made headlines by announcing the completion of its settlement with Gemini and the subsequent recovery of $50 million for users who were affected by the defunct Gemini Earn program. This news sent shockwaves throughout the cryptocurrency community, as it shed light on the deceptive practices that had been taking place.
The settlement not only addressed the legal charges filed by the NYAG against Gemini but also imposed significant consequences on the exchange. Gemini is now prohibited from operating any crypto lending programs in New York, a move that has surely left the exchange reeling. Furthermore, the settlement requires Gemini to cooperate in the NYAG’s investigations of Genesis parent Digital Currency Group (DCG), DCG CEO Barry Silbert, and former Genesis CEO Soichiro Moro.
The fallout from Gemini Earn’s failure is staggering, with over 230,000 users being impacted, including a significant number of residents in New York. The NYAG’s scathing comments, accusing Gemini of misleading investors about the risks involved in the program, have only added fuel to the fire. New York Attorney General Letitia James minced no words when she stated, “Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts.”
Gemini confirmed the settlement on the same day it was announced by the NYAG and assured users that the funds would be distributed within seven days. This final distribution will return the remaining 3% of crypto owed to users when the Earn program was suspended. The company expressed its satisfaction with the resolution of the lawsuit, stating, “We are also pleased to announce that … 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.”
The financial repercussions of the settlement are significant, with Gemini having to return more than $2 billion in crypto to customer accounts, completing the return of 97% of the funds owed. The distributions were made in-kind, ensuring that users received the same amount of cryptocurrency they had initially lent to the program.
The fallout of Gemini’s settlement with NYAG should serve as a cautionary tale for other exchanges and companies operating in the cryptocurrency space. The repercussions of deceptive practices can be severe, not only in terms of financial settlements but also in terms of reputational damage. This serves as a reminder that transparency and honesty are crucial in an industry built on trust.
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