- Gemini to pay $50 million for deceptive Earn program.
- New York bans Gemini from making crypto loans.
- New York Attorney General Targets Crypto Fraud.
New York Attorney General Letitia James obtained a $50 million settlement from Gemini Trust Company, LLC (Gemini) to compensate more than 230,000 investors, including 29,000 New Yorkers, who were allegedly deceived by Gemini's Earn program. The program, which promised secure returns, revealed no significant financial risks associated with sister company Genesis.
Gemini's Earn program attracted investors by promising to grow their money, but internal reviews showed Genesis' finances were shaky. Gemini was aware that Genesis loans lacked adequate protection and were mostly tied to entities like Sam Bankman-Fried's Alameda. However, Gemini did not disclose this to investors.
When the investment scheme collapsed, many investors had difficulty recovering their funds. The Attorney General's Office investigated these claims and found compelling evidence that Gemini misled investors.
The agreement ensures that all affected investors will receive a full refund of their digital assets automatically, without having to take any action. These assets will be available in your accounts. Attorney General James emphasized the seriousness of the situation and stated:
“Gemini broke the trust of hundreds of thousands of people, including at least 29,000 New Yorkers, and Gemini misappropriated their money through its deceptive Earn program.”
The settlement resolves the claims against Gemini and prohibits the company from operating cryptocurrency lending programs in New York. Additionally, Gemini must cooperate with the OAG's ongoing litigation against Digital Currency Group (DCG), DCG CEO Barry Silbert, and former Genesis CEO Soichiro Moro.
In October 2023, Attorney General James filed a lawsuit against Gemini for falsely promoting the Earn program as a safe investment. The investigation found that Gemini knew of Genesis' financial weaknesses but 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, he reached a $2 billion settlement with Genesis, addressed AWS Mining and NovaTechFX fraud, and obtained $22 million from KuCoin for violating regulations. He also recovered $4.3 million from Coin Cafe and $24 million from Nexo and took legal action against Celsius' former CEO.
The Gemini deal underscores 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 AG Takes on Crypto: Gemini's $50 Million Lesson appeared first on Coin Edition.
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