Department of Financial Services (NYDFS) says that Gemini is to return over $1.8B to the Earn Customers. On February 28, Gemini Trust Company, established by the Winklevoss twins in 2014, announced a groundbreaking settlement in principle with Genesis and other creditors amid the company’s ongoing bankruptcy process. The settlement outlines that Earn Program customers will receive 100% of their digital assets back. If approved by the Bankruptcy Court, users stand to regain their assets on a 1:1 basis – essentially receiving back exactly what they had initially lent.
Settlement Ensures 100% Asset Repayment
Gemini Trust Company, founded by the Winklevoss twins, has reached a settlement in principle with Genesis and other creditors in its bankruptcy process and has decided to return over $1.8B to the Earn Customers. The agreement ensures that Earn Program customers will receive 100% of their digital assets back.
If the Bankruptcy Court approves, users can expect a 1:1 return, meaning if they lent one bitcoin, they’ll receive one back, including any appreciation since lending.
$1.8 Billion in Assets at Today’s Prices
Gemini plans to return over $1.8 billion in assets at current market prices, surpassing the value when withdrawals were halted almost two years ago by $700 million.
Pending court approval, users may receive approximately 97% of their assets within two months, with the remaining 3% expected within 12 months.
Genesis Global Capital Fallout and SEC Settlement
The Earn Program, launched in February 2021 with Genesis Global Capital (GGC), allowed users to earn passive income through interest payments. However, withdrawals were suspended in November 2022 and permanently terminated in January 2023, leading to SEC charges against both companies for offering unregistered securities.
GGC recently settled with the SEC, agreeing to a $21 million civil penalty. Gemini, in its settlement with NYDFS, will contribute $40 million to the Genesis Global Capital bankruptcy for the benefit of Earn customers.
Gemini Fined Over Due Diligence Failures
NYDFS imposed a $37 million fine on Gemini for “significant failures” in safeguarding customers and not conducting sufficient due diligence on GGC. Superintendent Adrienne Harries emphasizes that the settlement is a victory for Earn users who regain their rights to assets Gemini “failed to protect.”
As part of the settlement, NYDFS retains the right to pursue further legal action against Gemini if the company fails to fulfil its obligation to return at least $1.1 billion to Earn Program customers.
Implications for Cryptocurrency Regulation
This landmark settlement amplifies the call for clearer and more robust regulatory frameworks for cryptocurrency exchanges. The NYDFS’s role in overseeing and penalizing lapses in due diligence underscores the need for proactive regulatory measures to safeguard investor interests and maintain market integrity. This news will have a definite impact on the crypto industry.
As cryptocurrency exchanges navigate an increasingly complex regulatory landscape, the Gemini settlement serves as a case study for the importance of stringent compliance and risk management. It highlights the symbiotic relationship between regulatory bodies and industry players in fostering a trustworthy and sustainable crypto ecosystem.
Gemini’s settlement is a positive step towards addressing the fallout from the Genesis bankruptcy, it underscores the challenges and responsibilities that come with operating in a rapidly evolving and heavily scrutinized industry. The implications of this settlement will likely resonate across the cryptocurrency landscape, influencing both regulatory approaches and industry best practices in the future.
Also Read: Peter Schiff Speads Cryptocurrency Caution: Predicts the Burst of the Bitcoin ETF Bubble
