Gemini exchange to pay $50 million in settlement with NYAG for fraud
Gemini repeatedly assured investors that the program was a "low-risk" investment. It also claimed that investing with Genesis through its Gemini Earn program was worthwhile, even though it knew that Genesis' loans were "under-secured
The agreement prohibits Gemini from engaging in crypto lending activities.
AG James filed a lawsuit against the company in October 2023, accusing it of misleading investors. The company repeatedly assured investors that the program was a "low-risk" investment. It also claimed that investing with Genesis through its Gemini Earn program was worthwhile, even though it knew that Genesis' loans were "under-secured." The AG's office also discovered that the loans were highly concentrated with one entity, Sam Bankman-Fried's Alameda Research, but the crypto exchange failed to inform investors.
"Gemini marketed its Earn program as a way for investors to grow their money, but lied and locked investors out of their accounts."
AG James.
"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," added AG James in a statement.
Under the settlement, Gemini is now banned from conducting any cryptocurrency lending programs in New York.
Investors to recover assets
The company swindled more than 230,000 investors of their monies, including about 29,000 New Yorkers who invested in the Gemini Earn program. Now, the settlement allows investors to recover their investments they made into the program but "were unable to withdraw when the investment program collapsed."
Gemini said on Friday that "final Earn distributions" will be available in customers' accounts within seven days.
"We are excited to deliver this full recovery to you and appreciate your ongoing patience and support throughout this process," said the exchange in a statement.
