cryptocurrency exchange gemini has agreed to a landmark settlement with the New York State Department of Financial Services (NYDFS), pledging to return at least $1.1 billion to customers harmed by the Genesis bankruptcy.
The Road to Rejuvenation: Gemini’s Promise to Win Customers
To correct its compliance failures and ensure customer protection, Gemini committed to reimburse Earn program participants and pay a $37 million penalty to NYDFS.
Gemini says about 97% of assets owed to customers are recoverable. within the next two monthsWe are working to secure the remaining balance within the next year.
As part of the agreement, Gemini will allocate $40 million to the bankruptcy of Genesis Global Capital (GGC) to benefit its profitable customers and work to address the damage caused by GGC’s financial collapse.
Revenue Update: Today we are pleased to announce that we have reached an agreement in principle with Genesis and other creditors regarding the Genesis bankruptcy, which will result in all revenue users receiving 100% of their digital assets if approved by the Bankruptcy Court. again…
— GeminiTrustCo (@GeminiTrustCo) February 28, 2024
Fallout: Gemini’s Compliance Failure and Customer Impact
NYDFS Superintendent Adrienne A. Harris emphasized that Gemini’s failure to conduct proper due diligence on GGC had a significant impact on Earn customers when GGC faced financial turmoil.
Harris emphasized that today’s agreement is an important step toward restoring trust and accountability in the cryptocurrency ecosystem. This is especially true for Earn customers who lost access to their assets due to the Genesis bankruptcy.
Gemini’s Earn program, launched in February 2021, aimed to provide interest payments to customers by lending their assets to GGC. However, the collapse of GGC in January 2023 resulted in significant losses for Earn participants, highlighting the risks associated with unregulated third-party partnerships.
NYDFS warned that additional regulatory action could be taken if Gemini fails to meet its obligations set forth in the agreement, emphasizing the importance of compliance and consumer protection in the evolving cryptocurrency exchange landscape.
Also Read: Cryptocurrency lender Genesis reportedly owes Gemini customers $900 million.