Gemini Settles Fraud Charges With $50M Payback: Report

Key Points:

• Gemini pays $50 million to settle a fraud lawsuit.
• The settlement requires asset return and bars Gemini from NY lending.

Gemini settles fraud for $50M after NY Attorney General accused it of deceiving 230K+ investors. Further crypto lending in NY is now barred.

According to BBG, Gemini has agreed to pay $50 million to settle fraud charges brought by the Attorney General of New York. In October, the Attorney General, Letitia James, filed a lawsuit against Gemini, accusing it of deceiving more than 230,000 investors about the risk involved in its investment product, Gemini Earn.

Gemini Settles Fraud Charges for $50 Million

The recent settlement requires Gemini to pay back about $50 million worth of digital assets to investors locked out of their accounts after the program imploded. Gemini has also been barred from running more cryptocurrency lending programs in New York.

Letitia James said that the Earn program violated that trust and fleeced the funds of hundreds of thousands of people, of whom approximately 29,000 are residents of New York. According to her, the settlement affirms that crypto companies are not allowed to deceive investors, which is unlawful and intolerable.

Readmore: Terraform And Kwon Agree To Pay $4.5 Billion Following Fraud Verdict

Digital Currency Group’s Financial Struggles and Implications

Included among her targets was the Digital Currency Group, or the parent company of Genesis, a now-defunct cryptocurrency lender that had partnered with Gemini to run its Earn program-which settled with the Attorney General for $2 billion earlier this year.

She accused Genesis and DCG of concealing more than $1 billion in losses after the cryptocurrency hedge fund Three Arrows Capital collapsed, and both have denied those allegations.

Genesis had heavy losses in the cryptocurrency market downturn, mainly coming from the collapse of Three Arrows and the cryptocurrency exchange FTX in 2022.

Once worth $10 billion, DCG announced they had borrowed approximately $575 million from Genesis Global Capital. DCG’s founder, Barry Silbert, CEO, wrote to his shareholders in November 2022 regarding a $1.1 billion note or IOU. Silbert explained that DCG assumed obligations from Genesis following the collapse of Three Arrows.