Fallout from Earn Program: Gemini Settles with New York AG for $50 Million

In a groundbreaking development for the cryptocurrency industry, New York Attorney General Letitia James announced a significant victory for investors on June 14th. James secured a $50 million settlement from Gemini, a prominent cryptocurrency exchange, to compensate users affected by its problematic Earn program.

This settlement concludes a lawsuit initiated by the Attorney General’s office in October 2023. The lawsuit accused Gemini of misleading approximately 230,000 investors, including many New Yorkers, about the inherent risks associated with their Earn program. James condemned the program as “deceptive,” accusing Gemini of betraying investor trust by concealing vital information about the risks involved while simultaneously locking users out of their invested funds.

This action follows a similar $2 billion settlement reached with Genesis Global Capital, Earn’s lending partner, in May 2024. Despite these settlements, the legal battle for accountability in the cryptocurrency space continues. James’ office remains committed to pursuing justice against Digital Currency Group (DCG), the parent company of Genesis, its CEO Barry Silbert, and former Genesis CEO Soichiro Moro.

The settlement not only compensates scammed investors but also imposes significant restrictions on Gemini’s operations within New York. As part of the agreement, Gemini is now banned from offering any cryptocurrency lending programs within the state. In a statement released via X (formerly Twitter), James reassured investors that “everyone that Gemini deceived will get their money back.” Reinforcing this commitment, Gemini Trust confirmed that affected Earn users could expect to receive “100% of the assets owed to them” within a week.

This settlement sends a powerful message from the New York Attorney General’s office, showcasing their proactive stance against illegal activities in the cryptocurrency industry. Their commitment to investor protection is further evidenced by their actions in 2023, which included lawsuits against former Celsius CEO Alex Mashinsky and the crypto exchange KuCoin. Mashinsky, facing criminal charges in the Southern District of New York, is slated to go to trial in January 2025.

The New York Attorney General’s decisive actions set a precedent for other regulatory bodies and highlight the growing focus on consumer protection within the rapidly evolving cryptocurrency sector. This case is likely to have a ripple effect throughout the industry, potentially prompting stricter regulations and increased transparency from cryptocurrency companies.

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