Superintendent Adrienne A. Harris Secures Commitment from Gemini Trust Company, LLC to Return at Least $1.1 Billion to Earn Program Customers

Superintendent Adrienne A. Harris Secures Commitment from Gemini Trust Company, LLC to Return at Least $1.1 Billion to Earn Program Customers

Gemini failed to prevent harm suffered by Earn program customers from alleged fraud by an unregulated third-party

Gemini will also pay a $37 million penalty for multiple compliance failures

New York State Department of Financial Services Superintendent Adrienne A. Harris announced today that Gemini Trust Company, LLC has committed to return at least $1.1 billion to Gemini Earn Program customers through the Genesis Global Capital, LLC (GGC) bankruptcy proceeding. In furtherance of that commitment, Gemini will contribute $40 million to the GGC bankruptcy for the benefit of Earn customers in coordination with the Bankruptcy Court. Gemini will also pay a $37 million fine to DFS for significant failures that threatened the safety and soundness of the company.

As part of the settlement, the Department has the right to bring further action against Gemini if the company does not fulfill its obligation to return at least $1.1 billion to Earn customers after the resolution of the GGC bankruptcy. Gemini commits to working through the bankruptcy process to ensure that Earn Customers make a full recovery of their virtual currency.

“Gemini failed to conduct due diligence on an unregulated third party, later accused of massive fraud, harming Earn customers who were suddenly unable to access their assets after Genesis Global Capital experienced a financial meltdown,” said Superintendent Harris. “Today’s settlement is a win for Earn customers, who have a right to the assets they entrusted to Gemini.”

Launched on February 1, 2021, Earn allowed Gemini customers to loan their virtual currency to GGC, an unregulated third party that was not licensed by the Department. GGC then loaned those same assets to its own counterparties. In return, Earn customers received interest payments. Despite Gemini’s public statements to the contrary, Gemini did not fully vet or sufficiently monitor GGC throughout the life of Earn and, in November 2022, GGC defaulted on approximately $1 billion worth of loans made by Earn customers. Two months later, GGC declared bankruptcy. Gemini’s failure to conduct sufficient and ongoing due diligence on GGC, as well as its failure to maintain adequate reserves throughout the life of Earn, caused significant reputational and monetary harm to Gemini itself and, to date, over 200,000 Earn customers, including almost 30,000 New Yorkers, remain unable to access their virtual currency.

In addition to Gemini’s failures related to Earn, the Department’s investigation revealed that Gemini engaged in unsafe and unsound practices that ultimately threatened the financial health of the company. Gemini Liquidity, LLC, an unregulated affiliate, collected hundreds of millions of dollars in fees from Gemini customers that otherwise could have gone to Gemini, substantially weakening Gemini’s financial condition. The Department’s investigation further identified various management and compliance deficiencies.

Gemini was chartered as a limited purpose trust company and authorized to engage in virtual currency business by the Department in 2015. GGC, Gemini’s third-party borrower for Earn, was not licensed or regulated by the Department. Genesis Global Trading, Inc. was the only Genesis entity licensed by DFS and was not involved in Earn. In January 2024, in connection with a settlement with DFS, GGT surrendered its BitLicense to the Department and has ceased operations.

Read the Gemini Trust Company, LLC consent order.

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