Title: Gemini Trust Returns Over $1.8 Billion to Customers Following NYDFS Settlement
The cryptocurrency exchange, Gemini Trust Company, founded by the Winklevoss twins, will return a minimum of $1.1 billion to its customers from the now defunct Gemini Earn lending program, as part of a settlement agreement with the New York Department of Financial Services (NYDFS).
In a statement issued on Wednesday, NYDFS revealed that Gemini would also pay a fine of $37 million for “significant failures” that allegedly put the stability and integrity of the company at risk. The regulatory body reserved the right to take further action against Gemini if it fails to uphold its obligations under the agreement.
The Winklevoss brothers, who gained notoriety for their legal battles against Mark Zuckerberg over Facebook’s origins, founded Gemini. In a blog post on Wednesday, the exchange announced that affected customers of its Gemini Earn program would receive 100% of their digital assets back, in kind, along with any accrued appreciation in value.
Gemini Earn was promoted as a low-risk investment where clients could lend their crypto assets to Genesis Global Capital (GGC) and earn interest payments of up to 8%. The blog post stated that Gemini would return a combined value of over $1.8 billion, which is approximately $700 million more than the total value when GGC temporarily halted withdrawals in November 2022.
November 2022 marked a tumultuous period for the crypto market, with the trillion-Dollar sector experiencing an unprecedented collapse following the demise of FTX, a once high-flying crypto exchange. Co-founder Sam Bankman-Fried was charged and convicted in November on seven counts of fraud and conspiracy related to the collapse of his company.
On Tuesday, lawyers for Bankman-Fried filed a memo with the Manhattan federal court recommending a prison sentence ranging from five to six and a half years. The sentencing, which is scheduled for March 28, could potentially see him face a maximum penalty of 110 years under federal guidelines.
This settlement does not mark the end of Gemini’s legal troubles. The exchange is currently facing a separate lawsuit filed by New York’s Attorney General in October, accusing three companies – Gemini, GCC and Digital Currency Group (DCG), the parent firm of GGC – of misrepresenting facts to investors while concealing over $1 billion in losses.
