Gemini to Return $1.1 Billion to Earn Program Clients in Bankruptcy Settlement
The New York State Department of Financial Services (NYDFS) has reached an agreement with Gemini in which the company has committed to refunding at least $1.1 billion to clients of the Gemini Earn program through the Genesis bankruptcy process. Gemini will also contribute $40 million to benefit Earn clients, in coordination with the bankruptcy court.
Penalties and Responsibilities of Gemini
Additionally, Gemini, co-founded by Cameron and Tyler Winklevoss, will pay a $37 million penalty to the DFS for failures that “jeopardized the security and soundness of the company.” The NYDFS has also stated that further actions may be taken against the company if it fails to meet its obligations.
Gemini did not exercise due diligence on an unregulated third party, later accused of massive fraud, causing harm to Earn program clients who suddenly found themselves unable to access their assets after the Genesis Global Capital financial collapse.
Settlement Details, Legal Proceedings, and Disputes
According to a post on its website, Gemini has stated that all Earn program users will receive “100% of their digital assets back” (at their current value) as part of a preliminary agreement with Genesis and other creditors. This agreement still needs to be finalized and approved by a bankruptcy court.
Genesis and its parent company, Digital Currency Group, were in court this week to argue for and against the bankruptcy plan proposed by Genesis last year. Creditors, according to Genesis’ plan, could see recoveries up to 77%. DCG disputes the legality of this plan under bankruptcy laws, arguing that it “favors” certain creditors and wants customer claims to be based on cryptocurrency prices at the time Genesis filed for bankruptcy in early 2023.
Dispute with the New York Attorney General
The two parties are also at odds over a settlement with the New York Attorney General. The NYAG sued Genesis, DCG, and Gemini at the end of last year, alleging that the three conspired on fraudulent schemes related to the Gemini Earn program, seeking $3 billion in restitution from Gemini and DCG.
