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NY Regulator Orders Gemini to Return $1.1 Billion to Earn Customers

2 mins
Updated by Kyle Baird
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In Brief

  • Gemini to reimburse $1.1 billion to Gemini Earn customers affected by November 2022 market crash.
  • NYDFS monitoring crypto exchange Gemini's compliance, warns of further action if commitments aren't met.
  • NYDFS alleged that there was a lack of due diligence by Gemini before entering into a partnership with Genesis.
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Crypto exchange Gemini has settled with the New York Department of Financial Services (NYDFS) to reimburse approximately $1.1 billion to its Gemini Earn customers. The customers could not withdraw their funds around the same time that the crypto exchange FTX collapsed.

The NYDFS has clarified that it will pursue additional measures against the exchange if it fails to meet its commitments.

Gemini To Repay Gemini Earn Customers

Gemini customers enrolled in the Gemini Earn program to earn increased interest rates by locking up their crypto assets. However, the now-defunct crypto lending platform Genesis facilitated the financial framework behind this program.

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

Read more: Gemini vs. Coinbase: Everything You Need To Know

In a statement on February 28, Superintendent Harris of the NYDFS clarified that Gemini neglected to conduct thorough due diligence on Genesis before their partnership for the Genesis Earn Program. Gemini attributed the collapse to Genesis.

“Gemini failed to conduct due diligence on an unregulated third party, later accused of massive fraud, harming Earn customers who were suddenly unable to access their assets after Genesis Global Capital experienced a financial meltdown.”

Furthermore, Gemini faces a $37 million fine from the NYDFS for

“Significant failures that threatened the safety and soundness of the company.”

Uncertainty Grips Gemini Earn Customers

Since users could not withdraw funds and after hearing that Genesis has filed for bankruptcy, there has been much speculation over whether they will see their assets again. And if so, how much will they get back?

In December 2023, BeInCrypto reported that Gemini Earn users could be getting potentially just 61% of the value of their crypto from January 19, 2023. This is the date that Gemini filed for bankruptcy. 

Read more: Top 5 DeFi Lending Platforms

Meanwhile, there was reportedly confusion over the protection of assets for Gemini Earn customers, with a portion of them believing it was protected under the FDIC.

In January 2023, BeInCrypto reported that several Gemini customers said that the exchange failed to distinguish the FDIC status of its own bank deposits of stablecoins and Gemini’s customer products.

This is a developing story.

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Ciaran Lyons
Ciaran is a cryptocurrency journalist based in Sydney, Australia. He particularly enjoys writing about CBDC developments and the practical implementations of cryptocurrency in real-world scenarios. He has also appeared across major television networks in Australia including Channel Ten, Channel Nine and SBS TV. Prior to his foray into cryptocurrency, Ciaran worked as a presenter on national radio station Triple J.