Twins, a major cryptocurrency exchange, has agreed to refund at least $1.1 billion to customers of its defunct lending program. The company will also pay a $37 million fine as part of a settlement with the New York Department of Financial Services (NYDFS).
What happened: The settlement, announced Wednesday, is the result of the NYDFS investigation into Gemini’s Earn program, which was operated in collaboration with the cryptocurrency lender Genesis Global Capital. The program was shut down during a cryptocurrency market crash in November 2022, which led Genesis to file for bankruptcy, Reuters reported.
The NYDFS may take further action against Gemini if the company fails to meet its commitment to return funds to customers following the resolution of Genesis’ bankruptcy. Gemini also pledged $40 million to help end Genesis’ bankruptcy, according to the regulator’s statement.
Because matter: The settlement is a significant step toward returning funds to Gemini’s Earn customers, who have been unable to access their accounts since late 2022. The NYDFS has been critical of Gemini’s failure to monitor and Conduct due diligence on Genesis during the Earn Program mandate.
See also: Dogecoin Social Sentiment Rises 600% in Single Day as DOGE Crosses 10 Cent Mark, But This Indicator Is
In particular, Gemini is led by The Winklevoss twinswho have been involved in a legal battle with Meta platforms CEO Marco Zuckerberg. The company had already sued Digital Currency Group (DCG) over the collapse of their joint cryptocurrency lending partnership.
Adriana Harris, the NYDFS superintendent, said Gemini’s failure to conduct due diligence on an unregulated third party, later accused of massive fraud, harmed Earn’s customers. The deal is a win for Earn customers, who are entitled to assets entrusted to Gemini.
In a blog post, Gemini expressed gratitude to the NYDFS for its role in the settlement, which offers coin-for-coin recovery for Earn users.
What’s next: The deal comes after a series of legal battles involving Gemini, Genesis and DCG. In October, Gemini filed a lawsuit against now-insolvent Genesis over rightful ownership of Grayscale Bitcoin Trust shares, valued at nearly $1.6 billion. This move was made just weeks before Benzinga’s conference on the future of digital assets, which called for a judicial declaration.
Earlier that same month, New York Attorney General Letizia Giacomo filed a lawsuit against Gemini, Genesis and DCG for defrauding investors of more than $1 billion. The lawsuit sought to ban the companies from the financial investment industry in New York and required restitution for investors and disgorgement of ill-gotten gains.
Read Next: This Trader Turned $2,708 Into $3.25 Million With Trump-Related MAGA Memecoin
Image via Shutterstock
Designed by Benzinga NeuroBy
Pooja Rajkumari
The GPT-4-based Benzinga Neuro content generation system leverages Benzinga’s extensive ecosystem, including native data, APIs, and more to create rich, timely stories for you. Learn more.