Gemini Trust Co., a prominent cryptocurrency exchange, has reached a $50 million settlement with New York Attorney General Letitia James concerning allegations of investor fraud. The legal action, initiated in October, alleged that Gemini misled over 230,000 investors regarding the risks associated with its Gemini Earn investment initiative. As part of the agreed settlement, Gemini will reimburse approximately $50 million in digital assets to investors affected by the collapse of the Earn program. Moreover, Gemini will discontinue its cryptocurrency loan service in New York.

Attorney General Letitia James emphasized that Gemini's Earn program deceived and financially harmed hundreds of thousands of individuals, including 29,000 residents of New York. The settlement aims to compensate misled investors and sends a strong message to cryptocurrency firms that deception of investors is unlawful and carries consequences.

This resolution follows previous inquiries by Attorney General James into the cryptocurrency industry, including a notable $2 billion settlement with Genesis Global Holdco LLC, a crypto lending entity associated with Digital Currency Group (DCG).

James alleged that Genesis and DCG attempted to hide over $1 billion in losses subsequent to the insolvency of the crypto hedge fund Three Arrows Capital, although the companies disputed the allegations. Genesis incurred significant losses during the downturn in the cryptocurrency market, exacerbated by failures at entities like Three Arrows and FTX in 2022.

DCG, previously valued at $10 billion, disclosed significant financial transactions, including $575 million in loans from Genesis Global Capital.

CEO Barry Silbert revealed in a shareholder communication a $1.1 billion promissory note, illustrating DCG's assumption of liabilities from Genesis related to the collapse of Three Arrows. These developments underscore the ongoing regulatory scrutiny and financial challenges within the cryptocurrency field.