Gemini to pay $50 million in settlement with NYAG for fraud

Crypto exchange Gemini has agreed to pay $50 million in settlement with the New York Attorney General (NYAG) for misleading close to a quarter million investors. NYAG Letitia James said the crypto exchange defrauded investors including New York citizens in investments tied to its Gemini Earn program when withdrawals stopped in November 2022.

Also read: Federal Judge rules SEC lawsuit against Gemini and Genesis to proceed

The exchange marketed its Gemini Earn program to investors, which allowed them to loan their crypto assets to the now-bankrupt Genesis Global Capital. Investors were promised that they would grow their money through the program.

The agreement bans Gemini from crypto lending

AG James sued the company in October 2023 for allegedly lying to investors. The company repeatedly assured investors that the program was a “low-risk” investment. It also said investing with Genesis through its Gemini Earn program was worthwhile, despite knowing that Genesis’ loans “were under-secured.” The AG’s office also discovered the loans were at a point highly concentrated with one entity, Sam Bankman-Fried’s Alameda Research, but the crypto exchange did not tell 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 carrying out any cryptocurrency lending programs in the New York.

We recovered $50 million from cryptocurrency platform @Gemini for defrauding hundreds of thousands of investors.  
 
Everyone that Gemini deceived will get their money back. https://t.co/tfQf1wxijE

— NY AG James (@NewYorkStateAG) June 14, 2024

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.

Also read: Genesis reaches agreement to settle SEC case for $21 million

AG James has called on New Yorkers deceived by crypto companies to report to the OAG as efforts continue to protect investors and bring sanity to the crypto industry.

Recently, she sued crypto companies AWS Mining and NovaTechFX and its founders for targeting immigrant and religious communities, defrauding them of over a billion dollars.

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Cryptopolitan reporting by Enacy Mapakame