The bankrupt company will have to figure out how to make the payments to avoid further legal issues
The New York State Department of Financial Services (NYDFS) and Gemini cryptocurrency exchange have reached a deal that requires Gemini to return at least $1.1 billion to clients of its Gemini Earn Program via the cryptocurrency company’s bankruptcy proceeding.
Gemini must also pay $37 million in penalties for numerous compliance oversights “that threatened the safety and soundness of the company,” according to a February 29 statement from NYDFS Superintendent Adrienne A. Harris.
NEW: Superintendent Adrienne A. Harris Secures Commitment from Gemini Trust Company, LLC to Return at Least $1.1 Billion to Earn Program Customers
More Here: https://t.co/QHIxcTDTJD pic.twitter.com/Q2DFJmS8sH
— NYDFS (@NYDFS) February 28, 2024
If authorized by the bankruptcy court, Gemini anticipates that Earn users will receive back 100% of their crypto assets plus appreciation. “If approved, we will be returning over $1.8 billion in value (at today’s prices) — $700 million more than when Genesis halted withdrawals on November 16, 2022.” Gemini added that about 97% of the assets should be available for recovery within two months.
Harris also disclosed that the agreement says Gemini will provide $40 million to the Genesis Global Capital (GGC) bankruptcy to benefit Earn customers.
“Gemini failed to conduct due diligence on an unregulated third party, later accused of massive fraud, harming Earn customers who were suddenly unable to access their assets after Genesis Global Capital experienced a financial meltdown,” said Harris. “Today’s settlement is a win for Earn customers, who have a right to the assets they entrusted to Gemini.”
Harris reiterated that the NYDFS could bring additional legal action against Gemini if it fails to meet its commitment.
Gemini’s Earn program launched in February 2021, with patrons loaning their coins to GGC (which Harris says didn’t hold an NYDFS license). GGC went bankrupt in January 2023 and defaulted on nearly $1 billion in loans from Earn customers.
NYDFS blamed Gemini for not thoroughly vetting or adequately monitoring GGC’s conduct while Earn was in operation.
