New York Attorney General Letitia James has achieved a significant victory for investors by securing a $50 million settlement from cryptocurrency exchange Gemini Trust Company LLC. This settlement ensures that investors in Gemini’s Earn program, who were unable to withdraw their assets when the program collapsed, will recover their investments in full. Additionally, Gemini is now prohibited from operating any crypto lending programs in New York.
Details of the Settlement
On Friday, the New York Attorney General’s Office announced that Letitia James had recovered approximately $50 million for over 230,000 investors, including at least 29,000 New Yorkers. These investors had been defrauded through the Gemini Earn program, which was offered in partnership with Genesis Global Capital (Genesis).
Key Points of the Settlement:
- Full Recovery: The settlement provides full recovery of the assets invested in the Earn program. Investors who were locked out of their accounts will have their digital assets returned.
- Banned Operations: Gemini is banned from operating any cryptocurrency lending program in New York.
- Cooperation with Ongoing Litigation: Gemini is required to cooperate with the Office of the Attorney General’s litigation against Digital Currency Group (DCG), Barry Silbert, and Genesis’ former CEO Soichiro Moro.
Background of the Case
In October of last year, Attorney General James filed a lawsuit against Gemini, accusing the company of misleading investors about the safety of the Gemini Earn program. Despite assurances that the program was low-risk, the lawsuit alleged that Gemini knew about the under-secured and highly concentrated loans Genesis had with Sam Bankman-Fried’s Alameda but failed to disclose these risks to investors.
Previous Settlement with Genesis
Last month, Attorney General James secured a $2 billion settlement from Genesis to compensate the defrauded investors. This recent $50 million settlement with Gemini follows that agreement and resolves the claims against Gemini.
Also Read: State Attorneys General Challenge SEC’s Authority in Kraken Crypto Lawsuit
Implications for Investors
Under the terms of the settlement, investors do not need to take any action to recover their digital assets. They will be able to access their assets directly in their accounts. This settlement marks a significant step in holding cryptocurrency platforms accountable and ensuring the protection of investors’ interests.
Statements from the Attorney General’s Office
The announcement from the New York Attorney General’s Office highlighted the impact of this settlement on protecting investors and maintaining the integrity of the financial system. By recovering these assets and banning Gemini from crypto lending in New York, the Attorney General’s Office aims to prevent similar fraudulent activities in the future.
