Crypto exchange Gemini Trust founded by Cameron and Tyler Winklevoss, will return at least $1.1 billion to customers of its now shuttered lending program, following a settlement with a New York regulator, CNN reports.
According to the report by CNN, Crypto exchange Gemini Trust will also pay a $37 million fine to the regulator “for significant failures that threatened the safety and soundness of the company,” the New York Department of Financial Services (NYDFS) said in a statement Wednesday.
NYDFS has the right to “bring further action against Gemini if the company does not fulfill its obligation,” it said in the statement.
Crypto exchange Gemini Trust is run by the Winklevoss twins, who are best known for spending years in litigation accusing Meta’s (META) Mark Zuckerberg of stealing their idea for Facebook and eventually received a $65 million settlement.
In a Wednesday blog post, the crypto exchange said that due to the settlement, customers of its lending program, Gemini Earn, would receive 100% of their digital assets back in kind plus any appreciation in value.
Gemini Earn marketed itself as a low-risk investment in which customers could lend crypto assets to another firm, Genesis Global Capital (GGC), while earning interest payments as high as 8%.
“We will be returning over $1.8 billion in value (at today’s prices),” according to the Gemini blog, which it said was $700 million more than when GGC halted withdrawals in November 2022.
That was when the trillion-dollar crypto market crumbled, due to the collapse of FTX, the once high-flying crypto exchange. Its co-founder, Sam Bankman-Fried, was convicted in November on seven counts of fraud and conspiracy for his role in the demise of the company.
On Tuesday, lawyers for Bankman-Fried filed a memo in a Manhattan federal court recommending a prison sentence between five and six-and-a-half years. Under federal guidelines, he could face a maximum of 110 years. His sentencing is scheduled for March 28.
Wednesday’s settlement doesn’t mean Gemini’s legal problems are over. It faces a separate lawsuit filed in October by New York’s attorney general accusing three companies, Gemini, GCC and Digital Currency Group, the parent firm of GCC, of lying to investors and covering up more than $1 billion in losses.