New York recovers $50 million for defrauded Gemini Earn crypto investors

NEW YORK (Reuters) – New York Attorney General Letitia James said on Friday her office has recovered $50 million from the cryptocurrency platform Gemini Trust to repay investors defrauded in its Gemini Earn program.

James said Gemini, run by billionaire twin brothers Cameron and Tyler Winklevoss, will provide full recoveries to more than 230,000 Earn investors, including 29,000 in New York, and agreed to a ban on operating crypto lending programs in the state.

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

Gemini Earn promised high interest rates to investors who lent crypto assets such as bitcoin to crypto lender Genesis Global Capital, a unit of Digital Currency Group, with Gemini taking agent fees that could exceed 4%.

Investors’ money was frozen when Genesis halted redemptions in November 2022, shortly after the collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange. Genesis filed for Chapter 11 bankruptcy two months later.

Friday’s payout is in addition to James’ related $2 billion settlement with Genesis announced on May 20.

Gemini has said Gemini Earn investors will recover more than they invested because they will be paid in digital assets such as bitcoin, whose value has more than tripled since redemptions were suspended.

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

The Winklevoss twins are each worth $2.7 billion, Forbes magazine said.

(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)