Cryptocurrency exchange Gemini Trust has agreed to reimburse a minimum of $1.1 billion to its users as a settlement, according to US regulatory body.
The company will also pay approximately $37 million in fines for compliance shortcomings, New York Department of Financial Services (NYDFS) said on Wednesday, reported Reuters.
The settlement comes as part of NYDFS' action against Gemini for compliance failures in its Earn investment program.
NYDFS pulled up Gemini for neglecting to properly supervise and evaluate its partner in the Earn program, Genesis Global Capital, which has since gone bankrupt.
The bankruptcy left around 200,000 Earn customers unable to access their virtual currency, currently valued at about $1.8 billion since late 2022. The order brings them one step closer to regaining access to their money.
The regulator identified shortcomings in Gemini's compliance procedures and management oversight, including deficiencies in customer due diligence and internal audit planning.
NYDFS Superintendent Adrienne Harris said in a statement, "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."
She called the settlement a win for Earn customers, who, she added, have a right to the assets they entrusted to Gemini.
Gemini as a response wrote in its blog post, "We’ve worked tirelessly over the past 15 months to advocate for Earn users and seek the return of their assets. As a part of this settlement, Gemini is contributing $40 million to Earn users' recovery."
It added, "Gemini thanks the New York Department of Financial Services (DFS) for its role in this settlement, which delivers a coin-for-coin recovery for Earn users."
Gemini's Earn program, operated in partnership with crypto lender Genesis Global Capital, was suspended during a market downturn in November 2022. The suspension resulted in Genesis filing for bankruptcy and sparked ongoing legal disputes involving Genesis, Gemini, and Genesis's parent company, Digital Currency Group (DCG).
Gemini, led by Cameron and Tyler Winklevoss, famously known as the Winklevoss twins, gained national recognition for their legal dispute with Meta Platforms' CEO, Mark Zuckerberg in the early days of Facebook. The protracted legal battle featured in David Fincher's Oscar winning film Social Media.
The company had earlier filed a lawsuit against DCG (Digital Currency Group) regarding the collapse of their collaborative cryptocurrency lending venture.
In December 2020, the two entities joined forces, enabling Gemini customers to lend their crypto assets to Genesis and earn interest. The partnership attracted billions of dollars' worth of crypto assets from investors.
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