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March 1, 2024

Crypto Exchange Gemini to Refund $1.1 Billion to Customers Following Settlement

Cryptocurrency exchange Gemini has reached a settlement with the New York Department of Financial Services, agreeing to refund over $1.1 billion to customers affected by its defunct lending program. Additionally, Gemini will pay a fine of $37 million for regulatory violations related to unsafe practices. The agreement marks a significant step towards resolving the issues faced by customers since 2022.

Gemini’s Earn program, conducted in partnership with crypto lender Genesis Global Capital, was suspended during the cryptocurrency market crash in November 2022. This disruption led to Genesis filing for bankruptcy, sparking legal disputes between Genesis, Gemini, and Genesis’s parent company, Digital Currency Group.

Customers have been unable to access their funds since late 2022, prompting regulatory scrutiny and legal action against Gemini. The settlement with the New York Department of Financial Services aims to address these concerns and provide restitution to affected customers.

The resolution means that Gemini’s Earn program participants are closer to recovering their funds, offering a semblance of relief after months of uncertainty. However, the NYDFS retains the authority to take further action against Gemini if the company fails to fulfill its commitment to refund at least $1.1 billion following Genesis’s bankruptcy proceedings.

Gemini, founded by Cameron and Tyler Winklevoss, known as the Winklevoss twins, gained prominence for their legal battles with Meta Platforms’ CEO Mark Zuckerberg. The exchange had previously sued Digital Currency Group over the collapse of their joint crypto lending initiative.

The partnership between Gemini and Genesis, established in December 2020, aimed to enable Gemini customers to lend their crypto assets to Genesis in exchange for earning interest. However, regulatory authorities identified lapses in Gemini’s oversight and due diligence processes regarding Genesis’s operations, leading to the present settlement.

New York Department of Financial Services Superintendent Adrienne Harris emphasized the importance of customer protection in the settlement, highlighting Gemini’s failure to conduct adequate due diligence on Genesis. The resolution is viewed as a victory for affected customers, affirming their right to access the assets entrusted to Gemini.

The settlement underscores the regulatory challenges faced by cryptocurrency exchanges and the necessity for robust oversight to safeguard investor interests. As Gemini takes steps to rectify past shortcomings, the crypto industry remains vigilant, emphasizing accountability and transparency in its operations.

Rajan Shukla

Rajan Shukla

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