Gemini Settlement With DFS Completed With $1.1 Billion Refunds To Customers

Key Points:

• The collapse of Gemini’s Earn program prompts regulatory action.
• New York DFS mandates a $1.1 billion reimbursement for affected users.
• The Gemini settlement underscores regulatory scrutiny on cryptocurrency exchanges.

Gemini, the cryptocurrency exchange, has announced plans to return funds to customers affected by the collapse of its Earn program, operated in partnership with Genesis Global, which recently filed for bankruptcy.

Gemini Faces Regulatory Fallout Over Earn Program Collapse

The move comes following allegations of negligence and financial misconduct, resulting in losses for over 200,000 Gemini users, including nearly 30,000 in New York.

The Gemini settlement, spearheaded by the New York Department of Financial Services (DFS), mandates the exchange to reimburse all affected customers, totaling approximately $1.1 billion, pending court approval of Genesis’s bankruptcy proceedings. Additionally, Gemini has pledged $40 million to aid in Genesis’s bankruptcy settlement, ensuring restitution for Earn participants.

DFS Superintendent, Harris, emphasized Gemini’s failure to conduct proper due diligence on Genesis, leading to significant financial harm for Earn customers. The exchange’s lack of oversight, coupled with management deficiencies, raised concerns about the company’s financial stability.

Impact on Earn Participants Addressed in Gemini Settlement Terms

Gemini’s agreement to reimburse all Earn users marks a significant step in addressing regulatory concerns surrounding cryptocurrency platforms. Recent crackdowns by governmental agencies, including the SEC and the Justice Department, underscore the need for increased oversight within the crypto industry.

Notably, this Gemini settlement follows earlier legal actions against Gemini and Genesis for securities violations related to the Earn program. While Genesis has settled with the state, Gemini remains embroiled in legal disputes, highlighting the ongoing regulatory challenges facing cryptocurrency firms.

As part of a separate settlement, Genesis Global Trading, a subsidiary of Digital Currency Group, has agreed to surrender its Bitlicense and cease operations in New York, signaling a broader effort to regulate crypto activities within the state.