The New York Department of Financial Services (NYDFS) has disclosed a settlement that ensures customers of the now-inoperative Gemini Earn program will reclaim all their investments, totaling more than $1.1 billion.
This move comes after the program's service provider, Genesis Global Capital (GGC), faced bankruptcy, impacting the program's operation and its participants.
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NYDFS has outlined a plan where the Winklevoss-led Gemini will contribute $40 million to the GGC's bankruptcy and an additional $37 million in payments to NYDFS.
Gemini also pledges to secure at least $1.1 billion for its Earn customers, aligning with the completion of Genesis' bankruptcy process. This commitment was highlighted in a post on the Gemini X account, promising to return their customers' digital assets in full, pending judicial approval.
This addresses the concerns raised by the suspension of customer withdrawals by Genesis in November 2022, which had impacted approximately 200,000 customers.
Genesis' later bankruptcy filing in January 2023 followed allegations from the NYDFS that Gemini had not adequately vetted GGC for its regulatory compliance.
This lack of due diligence came under further scrutiny when the Attorney General's office sued another division of Genesis for fraud, exposing the vulnerabilities within the Earn program and its backend operations.
Moreover, the investigation by NYDFS revealed Gemini's engagement in practices that jeopardized its financial stability:
Gemini Liquidity, LLC, an unregulated affiliate, collected hundreds of millions of dollars in fees from Gemini customers that otherwise could have gone to Gemini, substantially weakening Gemini’s financial condition.
The settlement marks a significant step towards resolving the uncertainties Gemini Earn customers face.
In other news, the Winklevoss twins, co-founders of Gemini, have recently donated $4.9 million to Fairshake PAC, aiming to enhance the electoral prospects of pro-crypto candidates in the upcoming U.S. elections.
