The New York State Department of Financial Services (NYDFS) announced today that it has reached a settlement with the cryptocurrency exchange Gemini (Gemini Trust Company, LLC), based in New York. Gemini has committed to returning at least $1.1 billion to customers of the Gemini Earn program and has also agreed to pay a fine of $37 million. In addition, Gemini has reached a settlement with the bankrupt cryptocurrency lending institution, Genesis. If the court approves Genesis’ bankruptcy plan, Gemini will fully return physical cryptocurrencies to Earn customers.
Background:
Grayscale GBTC selling pressure not over! Genesis approved by the court to sell over $1.3 billion GBTC.
DCG opposes subsidiary Genesis’ restructuring plan: Repayment amount should be valued at “bankruptcy date price”.
The NYDFS announced today that it has reached a settlement with Gemini, a cryptocurrency exchange headquartered in New York. Gemini has committed to returning at least $1.1 billion to customers of the Gemini Earn program and has also pledged to donate $40 million to the Genesis bankruptcy case to protect the interests of Gemini Earn customers. Additionally, the company will pay a fine of $37 million to the regulatory agency for significant compliance mistakes.
Gemini reaches a settlement with Genesis: Will fully return cryptocurrencies.
Gemini, founded by the Winklevoss twins Cameron and Tyler Winklevoss, announced earlier today that it has reached a preliminary settlement with the bankrupt cryptocurrency lending institution Genesis and other creditors involved in the Genesis bankruptcy case.
Further reading:
Understanding the Genesis bankruptcy event in detail from three major issues.
Gemini expected to return cryptocurrencies worth $1.8 billion.
It is understood that Gemini launched the Gemini Earn program in February 2021, allowing Gemini customers to lend cryptocurrencies to Genesis and earn an annualized interest rate of 7.4%. However, due to the liquidity crisis triggered by the fallout from Three Arrows Capital and FTX in November 2022, Genesis, which suspended withdrawals, filed for bankruptcy restructuring in January 2023, resulting in significant losses for over 200,000 Gemini Earn customers.
As the largest creditor in the Genesis bankruptcy case, Gemini had a falling out with Genesis and its parent company Digital Currency Group (DCG). In August last year, Gemini filed a lawsuit accusing DCG and its CEO Barry Silbert of fraud. In October last year, Gemini, Genesis, and DCG were sued by the New York Attorney General’s Office, alleging that they defrauded over 230,000 investors, involving an amount of nearly $1.1 billion.
According to Gemini:
“If the Genesis bankruptcy plan is approved, Earn users are expected to receive approximately 97% of the physical assets within about two months, and the remaining balance within the next 12 months.”
The company added that the required bankruptcy court procedures may take up to two months to complete, and they will keep Earn users updated during this process.
However, it should be noted that there are still variables as to whether Genesis’ bankruptcy plan will be approved by the court, as DCG, the parent company, expressed opposition to the repayment plan earlier this month. DCG insists that the amount Genesis repays to customers and creditors should not exceed the value of the cryptocurrency at the time of Genesis’ bankruptcy application in January 2023.
Related reports:
Genesis reaches a settlement with the SEC, agrees to pay $21 million to resolve “unregistered securities” lawsuit.
Accused of defrauding 230,000 people of $1.1 billion: New York Attorney General sues exchanges Gemini, Genesis, and DCG.
SEC tightens grip on DCG! Charges Gemini and Genesis with “selling unregistered securities”; Winklevoss twins: Not helping with debt repayment.