Gemini to Repay $1.1 Billion to Earn Customers Amid Genesis Bankruptcy; Faces $37M NYDFS Fine
Summary:
Gemini, the cryptocurrency trading platform, has reached an agreement with the New York State Department of Financial Services (NYDFS) to repay a minimum of $1.1 billion to its Gemini Earn Program customers via Genesis bankruptcy proceedings. Moreover, Gemini will be fined $37 million for multiple regulatory failures. Pending approval from the bankruptcy court, Gemini aims to provide a full return of the cryptocurrency assets to its Earn users. The platform also needs to contribute $40 million to the Genesis Global Capital (GGC) bankruptcy for the Earn customer's benefit. Failure to comply may result in further NYDFS action against Gemini.
In a recent development, cryptocurrency trading platform Gemini and the New York State Department of Financial Services (NYDFS) have come to a consensus. Gemini will repay a minimum of $1.1 billion to its customers who belong to the Gemini Earn Program, through the initiation of the Genesis bankruptcy procedure. In addition to that, a $37 million fine will be imposed on Gemini due to several regulatory failings that risked the platform's stability, underlined Adrienne A. Harris, the Superintendent of NYDFS, in a statement issued on Feb. 28.
Given the green light by the bankruptcy court, Gemini aims to repay the entire amount of cryptocurrency assets to its Earn users, coupled with a high return. "If sanctioned, Gemini hopes to return a whopping value of over $1.8 billion (calculated at the current market price) — $700 million more than the valued amount at the time when Genesis froze the withdrawals on November 16, 2022," the company stated. Gemini also claimed that they hope to recover around 97% of these assets in approximately two months.
The agreement also encompasses that Gemini will donate $40 million to the bankruptcy proceedings of Genesis Global Capital (GGC), as stated by Harris. She pointed out that "Gemini neglected to perform required checks on an unregulated third party, later accused of high-scale fraud, causing the Earn customers to be unable to access their assets when Genesis Global Capital underwent financial turbulence." According to Harris, the settlement stands as a victory for the Earn customers who deserve to reclaim the assets they put their faith in Gemini with. If Gemini does not fulfill its promises, Harris cautioned that the NYDFS could take further action against the company.
Gemini initiated the Earn program in February 2021, through which Earn clients loaned their coins to GGC (which Harris noted was not licensed by NYDFS). These assets were then loaned by GGC to its counterparties, giving Earn customers regular interest payments. However, GGC declared bankruptcy in January 2023, unable to pay back approximately $1 billion in loans taken from Earn clients. NYDFS accused Gemini of neglecting to fully scrutinize or actively oversee GGC's activities throughout the course of the Earn program.
Published At
2/29/2024 1:44:06 AM
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