This article briefly:

• Gemini Earn will return $1.1 billion to customers affected by the November 2022 market crash.

•The New York Department of Financial Services (NYDFS) is monitoring cryptocurrency exchange Gemini for compliance and has warned of further action if commitments are not met.

•NYDFS claims Gemini lacked due diligence before entering into partnership with Genesis.

Cryptocurrency exchange Gemini has reached a settlement with the New York Department of Financial Services (NYDFS) to repay approximately $1.1 billion to its Gemini Earn customers. The reason is that these customers were unable to withdraw their funds when the crypto exchange FTX collapsed.

NYDFS has made it clear that it will take additional steps against the exchange if Gemini fails to live up to its commitments.

Gemini will return money to Gemini Earn customers

Gemini customers participate in the Gemini Earn program to earn increased interest rates by locking up crypto assets. However, now-defunct crypto lending platform Genesis provided the financial framework for the scheme.

Just three months after the collapse of FTX in November 2022, Genesis declared bankruptcy and froze assets belonging to Gemini Earn customers.

In a statement on February 28, NYDFS Director Harris clarified that Gemini neglected to conduct a thorough due diligence on Genesis before partnering with the Genesis Earn program. Gemini blamed Genesis for the collapse.

"Gemini failed to conduct due diligence on an unregulated third party and was later accused of massive fraud, harming Earn customers who suddenly lost access to their assets as Genesis Global Capital suffered a financial collapse."

In addition, Gemini faces a $37 million fine from NYDFS for "serious errors that endangered the safety and soundness of the company."

Gemini Earn customers plunged into uncertainty

With users unable to withdraw their funds and news of Genesis filing for bankruptcy, there has been speculation about whether they will ever see their assets again and how much money they will get back.

In December 2023, media reported that Gemini Earn users may only receive 61% of the value of their cryptocurrency starting January 19, 2023. This is also the date Gemini filed for bankruptcy.

Meanwhile, there are reports of confusion over asset protection for Gemini Earn customers, with some believing their assets are protected by the Federal Deposit Insurance Corporation (FDIC).

In January 2023, media reported that some Gemini customers said the exchange failed to distinguish to the FDIC the status of its own stablecoin bank deposits and Gemini customer products. #Gemini #NYDFS