Winklevoss’ Gemini To Pay $50m In Crypto Fraud Settlement

Matthew Broersma,
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Winklevoss twins’ Gemini Trust to pay $50m to settle cypto fraud claims over failed Gemini Earn product in New York settlement

Cryptocurrency exchange Gemini Trust is to pay $50 million (£39m) to settle claims by New York’s attorney general over the allegedly fraudulent Gemini Earn programme.

Gemini, operated by billionaire twins Cameron and Tyler Winklevoss, is to provide full recovery to more than 230,000 Earn investors, including 29,000 in New York, and will agree to a ban on providing any future crypto lending programmes in the state, attorney general Letitia James said.

In her October lawsuit against the firm James alleged the company had lied to investors about the risks of the programme.

“Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts,” she said. “Today’s settlement will make defrauded investors whole.”

Tyler and Cameron Winklevoss. Image credit: Gemini Trust crypto
Tyler and Cameron Winklevoss. Image credit: Gemini Trust

Crypto collapse

Gemini Earn told investors they would receive high interest rates for lending crypto assets such as Bitcoin to lender Genesis Global Capital, a unit of Digital Currency Group, while Gemini Trust took agent fees that in some cases exceeded 4 percent.

Investors’ funds were frozen in November 2022 after the collapse of the FTX crypto exchange and Genesis filed for Chapter 11 bankruptcy two months later.

James reached a separate $2bn settlement with Genesis announced on 20 May.

Gemini Trust has said Earn investors will receive more than they invested because they are to be paid in digital assets such as Bitcoin, whose value has more than tripled since funds were frozen.

Fraud allegations

Gemini also agreed to cooperate in James’ fraud lawsuit filed in October against Digital Currency Group and its chief executive Barry Silbert, who have called the claims baseless.

The lawsuit, one of several filed by James targeting the crypto industry, accuses Genesis and DCG of attempting to conceal more than $1bn in losses following the collapse of crypto hedge fund Three Arrows Capital, which was forced into liquidation in June 2022.

Gemini Trust additionally agreed to pay more than $1bn to Earn customers in a settlement with the New York Department of Financial Services in March.