Attorney General Letitia James recovered approximately $50 million from the cryptocurrency platform Gemini Trust Company, LLC for more than 230,000 investors, including at least 29,000 New Yorkers, who invested in the Gemini Earn program and were defrauded. The announcement was made on June 14.
Gemini allegedly misled thousands of investors on the risks associated with Gemini Earn, an investment program it offered with another cryptocurrency company, Genesis Global Capital. The settlement provides all defrauded investors full recovery of the assets they invested in the Earn program but were unable to withdraw when the investment program collapsed. Today’s settlement follows James’ $2 billion settlement with Genesis, resolves claims against Gemini, bans Gemini from operating any cryptocurrency lending program in New York and requires the company to cooperate with the Office of Attorney General’s (OAG) litigation against Digital Currency Group (DCG), DCG’s CEO Barry Silbert, and Genesis’ former CEO Soichiro Moro.
“Hundreds of thousands of people, including at least 29,000 New Yorkers, had their trust broken and their money swindled by Gemini through its bogus Earn program,” James said. “Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts. Today’s settlement will make defrauded investors whole and should remind cryptocurrency companies that deceiving investors is illegal and will not be tolerated by my office.”
Under the settlement, Gemini will return approximately $50 million worth of digital assets to Gemini Earn investors who were locked out of their accounts. Investors do not need to take any action to recover their digital assets and they will be able to access their digital assets in their accounts.
In October 2023, Attorney General James sued Gemini for lying to investors about its Gemini Earn program. Gemini repeatedly assured investors that investing with Genesis through their Gemini Earn program was a low-risk investment. However, OAG’s investigation found that Gemini’s internal analyses of Genesis showed that the company’s financials were risky. The lawsuit alleged that Gemini knew Genesis’ loans were under-secured and at one point highly concentrated with one entity, Sam Bankman-Fried’s Alameda, but did not reveal this information to investors. Last month, James secured $2 billion from Genesis for defrauded victims.
James urges New Yorkers who have been deceived by cryptocurrency companies to report these issues to OAG. She also encourages workers in the cryptocurrency industry who may have witnessed misconduct or fraud to file an online whistleblower complaint with her office, which can be done anonymously.