Gemini Resolves Dispute with NYDFS, Pledges $1.1 Billion to Reimburse Earn Customers
Gemini Trust Co. has reached a settlement with the New York Department of Financial Services (NYDFS) in which it will return $1.1 billion to customers affected by its failed Earn program. As part of the settlement, Gemini will also pay a $37 million fine. The settlement comes after Gemini’s lack of due diligence on Genesis Global Capital, which defaulted on loans, resulted in fraud allegations and harm to Earn program customers.
The agreement states that Gemini will refund at least $1.1 billion to Earn program customers through the Genesis Global Capital bankruptcy proceedings. In addition, Gemini will contribute an extra $40 million to benefit Earn customers via the bankruptcy fund. Superintendent Adrienne A. Harris of NYDFS called the settlement a win for Earn customers, stating that they have a right to the assets they entrusted to Gemini.
The Earn program was launched on February 1, 2021, allowing Gemini customers to lend their virtual currency to Genesis Global Capital. However, GGC defaulted on approximately $1 billion in loans in November 2022, affecting over 200,000 Earn customers. Gemini has shared the settlement in principle with Genesis and creditors in the Genesis Bankruptcy, with the promise of returning 100% of digital assets to Earn users pending Bankruptcy Court approval.
Gemini commits to returning over $1.8 billion in value at current prices, exceeding the frozen amount during Genesis’ withdrawal halt in November 2022. Earn users can expect to receive approximately 97% of their assets within two months, with the remaining amount delivered within the next 12 months. The $1.1 billion settlement marks a significant milestone for the Gemini Earn Program, addressing compliance lapses, fraud allegations, and reputational damage. It provides Earn program customers with a resolution to a challenging period in Gemini’s history without altering any original information.
The final approval for the settlement is pending and may take up to two months through the Bankruptcy Court process.