Gemini Trust Company, LLC (“Gemini”) has pledged to refund at least $1.1 billion to customers affected by the Genesis Global Capital, LLC (“GGC”) bankruptcy. To honor this commitment, Gemini will contribute $40 million to the GGC bankruptcy and pay a $37 million fine to the New York State Department of Financial Services (DFS) for serious operational shortcomings.
Under the settlement, DFS retains the right to take further action if Gemini fails to fulfill its obligation to reimburse Earn customers. Gemini assures cooperation in the bankruptcy proceedings to ensure affected customers recover their virtual currency in full.
DFS Superintendent Adrienne A. Harris emphasized Gemini’s negligence in vetting GGC, an unregulated third party accused of fraud, which led to financial losses for Earn customers. The settlement aims to rectify this, ensuring Earn customers regain access to their assets.
Gemini’s Earn program, launched in February 2021, facilitated virtual currency loans to GGC, an unlicensed entity. Lack of due diligence led to GGC defaulting on approximately $1 billion in loans, ultimately declaring bankruptcy. Over 200,000 Earn customers, including nearly 30,000 New Yorkers, are still unable to access their funds.
Additionally, DFS’s investigation uncovered unsafe practices by Gemini, including substantial fee collection by unregulated affiliate Gemini Liquidity, LLC. Management and compliance deficiencies were also identified.
Gemini, initially licensed by DFS in 2015, engaged GGC as a third-party borrower for Earn, which was not regulated by DFS. GGC’s only licensed entity, Genesis Global Trading, Inc. (“GGT”), surrendered its BitLicense and ceased operations in January 2024 as part of a settlement with DFS.
By FCCT Editorial Team
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