Cryptocurrency exchange Gemini, owned by the Winklevoss twins, has returned $2.2 billion to users of its EARN program after halting withdrawals 18 months ago, CNBC reported. The move follows a major settlement between the New York Attorney General and Gemini's lending partner, Genesis.
Cryptocurrency Lending Users Recover Money
With the settlement worth more than $2 billion, investors are expected to recover their losses in full, representing a major victory for those affected. The decision was reached between Gemini and Genesis under the supervision of the New York Attorney General.
Gemini's Earn program was launched in 2021 to offer users the opportunity to earn attractive returns on their cryptocurrency holdings. By participating in the program, users entrusted their assets to Gemini, which then facilitated lending to institutional borrowers through Genesis Global Capital.
However, the program faced challenges in November 2022 when Genesis halted new loan originations and redemptions, prompting Gemini to suspend withdrawals. Gemini is committed to returning 100% of digital assets to Earn users. The company's approach, coupled with regulatory intervention, has paved the way for a significant recovery for affected investors.
Gemini reportedly emailed users that Earn's initial distributions, roughly 97% of the money owed to Genesis users, were available in Gemini accounts. The cryptocurrency exchange said the distribution follows a settlement with Genesis and other creditors, which will result in Earn users receiving full payment. At $2.18 billion, the distribution is said to represent a 232% rebound for users since Gemini suspended withdrawals in the Earn program.
Niag suit
Last year, New York Attorney General Letitia James sued Gemini, Genesis, and Digitalcurrency Group for allegedly orchestrating a Ponzi scheme that misled more than 230,000 investors and resulted in losses exceeding $1 billion.
The lawsuit alleged that Gemini misled investors about the integrity of its partnership with Genesis while Genesis and DCG concealed significant losses. Investors were told that their money would be safe and grow through the Gemini Earn program, which promised profits by lending assets to third parties. But the Public Prosecutor’s investigations revealed a different reality.
The losses resulted from defaults by major borrowers such as Three Arrows Capital, which failed to repay large loans, and Babel Finance, resulting in a combined loss of more than $1.2 billion. Despite these significant financial setbacks, Genesis and DCG reportedly misled investors by falsely claiming that losses had been absorbed through a promissory note.
This article was written by Jared Kirui at www.financemagnates.com.