New York AG Recovers $50 Million for Gemini’s Earn Investors

The New York Attorney General’s office, led by Attorney General Letitia James, announced a significant recovery of approximately $50 million on behalf of over 230,000 investors involved in the Gemini Earn program. This recovery adds to the relief efforts following the program’s controversial collapse, which affected hundreds of thousands, including at least 29,000 New Yorkers.

Gemini’s Earn program was heavily criticized for misleading investors about the potential growth of their funds while simultaneously restricting access to their accounts. “Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts,” stated Attorney General James. This deceit not only breached investor trust but also contravened legal standards for financial operations.

The $50 million recovery from Gemini supplements a prior $2 billion settlement with Gemini’s Earn partner, Genesis Global Capital, finalized last month. This earlier settlement aimed to reimburse users of the Gemini Earn program, ensuring that investors are now fully compensated on an “in-kind coin-for-coin basis,” according to the consent order.

In detailing the settlements, James emphasized the legal consequences for deceptive practices in the cryptocurrency space. “Today’s settlement will make defrauded investors whole and should remind cryptocurrency companies that deceiving investors is illegal and will not be tolerated by my office,” she remarked.

Both Gemini and Genesis faced allegations of misrepresenting the risks tied to the Earn program. While Genesis has not admitted to these allegations, the settlement prohibits the firm from operating in New York and mandates their cooperation with ongoing litigation against Digital Currency Group and its associated executives.

As stipulated in the consent order, Gemini is required to return the $50 million in digital assets directly to affected investors within a week. This restitution process is designed to be seamless for investors, requiring no additional actions on their part to regain access to their assets.

Moreover, following this settlement, Gemini will no longer offer crypto lending products in New York, marking a significant shift in its operational capabilities within the state.

This announcement comes shortly after the New York Attorney General’s office initiated a $1 billion lawsuit against another pair of crypto companies accused of exploiting immigrant and religious communities with false promises of financial independence, only to misappropriate their funds.

The Gemini case serves as a stern warning and a call for heightened integrity and transparency within the burgeoning cryptocurrency industry, underlining the importance of regulatory oversight to protect investors.