Gemini Settles with NY Regulator, Faces $37M Fine

1. Pays $37M fine, agrees to $1.1B restitution in settlement over compliance failures with NY regulator.

2. Pending court approval, Gemini commits to returning 100% of digital assets to customers affected by the Genesis Global Capital fallout.

3. NYDFS maintains authority for future actions if Gemini fails to fulfill the $1.1B restitution within Genesis Global Capital bankruptcy proceedings.

Gemini has agreed to a $37 million fine and the restitution of at least $1.1 billion to customers in its Gemini Earn lending program. 

But, Pending bankruptcy court approval, the settlement addresses compliance failures linked to Gemini’s association with now-bankrupt Genesis Global Capital, LLC. It aims to resolve the aftermath of these issues.

Earn Users to Receive Full Digital Asset Recovery

It pledges that if the settlement gains bankruptcy court approval, customers will receive “100% of their digital assets back in kind.” 

“Gemini’s failure to conduct sufficient and ongoing due diligence on GGC, as well as its failure to maintain adequate reserves throughout the life of Earn, caused significant reputational and monetary harm to Gemini itself and, to date, over 200,000 Earn customers, including almost 30,000 New Yorkers, remain unable to access their virtual currency,”

NYDF

If the restitution aims to rectify the fallout from Gemini’s failure to conduct due diligence on Genesis Global Capital. This subsequently faced financial turmoil and was accused of massive fraud.

NYDFS Superintendent Adrienne Harris emphasized Gemini’s lapse in vetting or monitoring Genesis Global Capital, an unregistered third party. The lack of due diligence caused harm to over 200,000 Earn customers. Almost 30,000 in New York were unable to access their virtual currency.

As part of the settlement, NYDFS retains the authority to bring future actions against Gemini. If the agreed $1.1 billion. That is, the restitution isn’t fulfilled within the Genesis Global Capital bankruptcy proceedings. 

Gemini will also contribute $40 million to assist with the ongoing bankruptcy process.

Gemini Earn’s Legal Turmoil Continues

This settlement marks the latest chapter in Gemini Earn’s legal troubles. 

The New York Attorney General’s Office previously sued Gemini, Genesis Global Holdco, and Digital Currency Group over the crypto lending program. Moreover, Genesis Global Holdco settled a lawsuit with the Securities and Exchange Commission (SEC). This had raised concerns about the program being an unregistered securities offering.

In response to the prolonged legal process, they expressed gratitude for its customers’ patience and support. The exchange recognizes the hardships faced by customers throughout the Earn program’s tumultuous journey.

As the legal saga surrounding Gemini Earn unfolds, the crypto industry is closely watching the implications and regulatory responses shaping the rapidly evolving landscape.