US Attorney Recovers $50 Million for Fraudulent Gemini Earn Crypto Investors

New York:

New York Attorney General Letitia James recovered $50 million from cryptocurrency platform Gemini Trust to reimburse investors defrauded in its Gemini Earn program, she said Friday.

Gemini, run by billionaire twin brothers Cameron and Tyler Winklevoss, will provide full recoveries to more than 230,000 Earn investors, including 29,000 in New York, and has agreed to a ban on the operation of crypto lending programs in the state.

The payment is in addition to James’ $2 billion deal with cryptocurrency lender Genesis Global Capital, which she announced on May 20.

“Gemini marketed its Earn program as a way for investors to grow their money, but in fact it lied and blocked access to investors’ accounts,” James said. “Today’s settlement will cure defrauded investors.”

The funds will be accessible within seven days, Gemini told investors on Friday. “With this final distribution, Earn users will have received 100% of the assets owed to them,” she said.

Gemini Earn promised high interest rates to investors who lent crypto assets like bitcoin to Genesis, a unit of Digital Currency Group, with Gemini charging rates that could exceed 4%.

More than $1 billion was frozen when Genesis halted redemptions in November 2022, shortly after the collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange. Genesis filed for Chapter 11 bankruptcy two months later.

Gemini neither admitted nor denied any wrongdoing in agreeing to the settlement. New York’s top financial regulator fined Gemini $37 million in February for compliance failures.

Investors are expected to get back more than they invested because they are being paid in digital assets like bitcoin, whose value has more than tripled since redemptions were suspended.

Gemini also agreed to cooperate in James’ October fraud lawsuit against Digital Currency Group and its chief executive, Barry Silbert. They considered his claims to be unfounded.

Spokespeople for Digital Currency Group did not immediately respond to requests for comment on the Gemini deal.

The Winklevoss twins are each worth $2.7 billion, Forbes magazine said.

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