Gemini to pay $50 million over misleading Earn program.
NY bans Gemini from crypto lending.
NY Attorney General targets crypto fraud.
New York Attorney General Letitia James has secured a $50 million settlement from Gemini Trust Company, LLC (Gemini) to compensate over 230,000 investors, including 29,000 New Yorkers, who were allegedly misled by Gemini’s Earn program. The program, promising secure returns, failed to disclose significant financial risks associated with partner firm Genesis.
Gemini’s Earn program lured investors by promising to grow their money, but internal reviews showed that Genesis’s finances were unstable. Gemini was aware that Genesis’s loans lacked adequate protection and were mostly tied up with entities like Sam Bankman-Fried’s Alameda. However, Gemini did not disclose this to investors.
When the investment scheme collapsed, many investors struggled to recover their funds. The Attorney General’s office investigated these claims and found compelling evidence that Gemini misled investors.
The settlement ensures that all affected investors will receive full reimbursement of their digital assets automatically, without having to take any action. These assets will be available in their accounts.Attorney General James emphasized the severity of the situation, stating:
“Hundreds of thousands of people, including at least 29,000 New Yorkers, had their trust broken and their money misappropriated by Gemini through its misleading Earn program.”
The settlement resolves claims against Gemini and prohibits the company from operating any cryptocurrency lending programs in New York. Moreover, Gemini must cooperate with the OAG’s ongoing litigation against Digital Currency Group (DCG), DCG’s CEO Barry Silbert, and Genesis’s former CEO Soichiro Moro.
In October 2023, Attorney General James filed a lawsuit against Gemini for falsely promoting the Earn program as a secure investment. The investigation found that Gemini knew about Genesis’s financial weaknesses yet told investors the program was safe. This lawsuit was part of a broader effort to ensure accountability for dishonest cryptocurrency companies.
Attorney General James has led efforts to protect investors and regulate the cryptocurrency industry. Recently, she settled for $2 billion with Genesis, addressed fraud by AWS Mining and NovaTechFX, and obtained $22 million from KuCoin for breaking regulations. She also recovered $4.3 million from Coin Cafe and $24 million from Nexo and pursued legal action against the ex-CEO of Celsius.
The Gemini settlement underscores the ongoing efforts by regulators like Attorney General James to protect investors in the volatile cryptocurrency market. New Yorkers and industry insiders alike are encouraged to report any suspicious activity, highlighting the critical role whistleblowers play in maintaining the integrity of the burgeoning crypto space.
The post New York’s AG Takes on Crypto: Gemini’s $50 Million Lesson appeared first on Coin Edition.
