News
New York Recovers $50 Million for Defrauded Gemini Earn Cryptocurrency Investors
By Jonathan Stempel
NEW YORK (Reuters) – New York Attorney General Letitia James has recovered $50 million from cryptocurrency platform Gemini Trust to repay defrauded investors in its Gemini Earn scheme, she said on 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 operating cryptocurrency lending programs in the state.
The payment is in addition to the $2 billion deal between James and lender Genesis Global Capital, announced on May 20.
“Gemini marketed its Earn program as a way for investors to grow their money, but in reality it lied and locked investors out of their accounts,” James said. “Today’s settlement will save 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 they are owed,” she reads.
Gemini Earn promised high interest rates to investors who lent crypto assets like bitcoin to Genesis, a unit of Digital Currency Group, with Gemini accepting fees that could top 4%.
More than $1 billion was frozen when Genesis stopped refunds in November 2022, shortly after the collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange. Genesis filed for Chapter 11 bankruptcy two months later.
The Twins neither admitted nor denied any wrongdoing in agreeing to a settlement. New York’s top financial regulator fined Gemini $37 million in February for noncompliance.
Investors are expected to get back more than they put in because they get paid in digital assets such as bitcoin, which has more than tripled in value since redemptions were suspended.
Gemini also agreed to cooperate in James’ October fraud lawsuit against Digital Currency Group and its CEO, Barry Silbert. They called his claims 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.
(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)