New York Attorney General Secures $50 Million from Gemini for Defrauded Investors
The New York Attorney General’s office, led by Letitia James, has secured a $50 million settlement from the cryptocurrency exchange Gemini Trust Company, LLC, aimed at compensating over 230,000 investors defrauded through Gemini’s Earn program. This follows a broader crackdown on cryptocurrency firms engaging in deceptive practices.
Gemini, in partnership with Genesis Global Capital, marketed the Earn program as a low-risk investment opportunity, promising substantial returns to investors. However, an investigation by the Attorney General’s office revealed that Gemini misled investors about the actual risks involved. Internal documents from Gemini showed that the company was aware of Genesis’s risky financial status and unsecured loans but failed to disclose this information to investors. This misrepresentation led to substantial financial losses for those who participated in the Earn program.
The $50 million settlement is intended to make the defrauded investors whole, providing full recovery of the assets they were unable to withdraw when the Earn program collapsed in November 2022. The recovery will be in-kind, meaning investors will receive the same type and amount of cryptocurrency they originally invested. According to the settlement terms, affected investors can expect to access their recovered digital assets within seven days without needing to take any action.
In addition to the financial compensation, Gemini is banned from operating any cryptocurrency lending programs in New York. This prohibition is part of broader regulatory actions aimed at ensuring transparency and protecting investors in the burgeoning cryptocurrency market.
This settlement with Gemini is part of a larger legal effort by the New York Attorney General’s office to address fraudulent activities within the cryptocurrency industry. Last month, Attorney General James secured a $2 billion settlement from Genesis Global Capital for similar fraudulent activities related to the Earn program. The ongoing litigation continues against Digital Currency Group (DCG), its CEO Barry Silbert, and former Genesis CEO Soichiro Moro.
The lawsuit against these entities alleges a complex scheme of misstatements, omissions, and concealment to disguise significant financial losses. The New York Attorney General’s office remains committed to holding these parties accountable and ensuring that investors are protected from deceptive practices.
Attorney General James has positioned herself as a national leader in regulating the cryptocurrency industry and protecting investors. Her office has initiated several high-profile cases against other cryptocurrency firms accused of fraudulent activities. These include lawsuits against KuCoin, Coin Cafe, and the former CEO of Celsius. In each case, the focus has been on enforcing compliance with securities laws and ensuring that companies do not mislead investors about the risks associated with cryptocurrency investments.
