Letitia James, the New York Attorney General, announced on Friday that she has successfully recouped $50 million from the cryptocurrency platform Gemini Trust to compensate investors who were defrauded in its Gemini Earn program
Gemini, managed by billionaire twin brothers Cameron and Tyler Winklevoss, has agreed to provide full recoveries to over 230,000 Earn investors, including 29,000 in New York.
Additionally, the company has decided to prohibit the operation of crypto lending programs in the state.
In addition to James’ related $2 billion settlement, the payout establishes a new relationship with crypto lender Genesis Global Capital, as she disclosed on May 20.
“Gemini marketed its Earn program as a way for investors to grow their money but lied and locked investors out of their accounts,” according to James. “Today’s settlement will make defrauded investors whole.”
Gemini informed investors on Friday that the funds will be accessible within seven days. “With this final distribution, Earn users will have received 100% of the assets owed to them,” according to the announcement.
Investors who lent crypto assets, such as bitcoin, to Genesis, a division of Digital Currency Group, were guaranteed high interest rates from Gemini Earn. However, Gemini would incur fees that could surpass 4%.
Genesis suspended redemptions in November 2022, immediately following the collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange’s collapse, resulting in over $1 billion freezing. Two months later, Genesis submitted a Chapter 11 bankruptcy petition.
In agreeing to settle, Gemini did not acknowledge or deny any wrongdoing. In February, Gemini was assessed a $37 million sanction by the state’s chief financial regulator for noncompliance violations.
Investors are anticipated to receive a greater return than their initial investment because they are being compensated in digital assets, such as bitcoin, which have increased in value by over threefold since redemptions were suspended.
Gemini has also consented to participate in the October fraud lawsuit filed by James, which initiates a new chapter against Digital Currency Group and its CEO, Barry Silbert. They have dismissed her allegations as unfounded.
Representatives of Digital Currency Group did not pshould have beenaddress requests for comment regarding Gemini’s settlement.
Forbes magazine reported that the Winklevoss twins are each worth $2.7 billion.
