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Crypto exchange Gemini to pay US$1.1 billion back to customers

Gemini to pay US$1.1 billion back to customers, seen here, are the Winklevoss twins in Singapore in September 2023. (Joseph Nair / Bloomberg / Getty Images via CNN Newsource) Gemini to pay US$1.1 billion back to customers, seen here, are the Winklevoss twins in Singapore in September 2023. (Joseph Nair / Bloomberg / Getty Images via CNN Newsource)
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Gemini Trust, a cryptocurrency exchange founded by Cameron and Tyler Winklevoss, will return at least US$1.1 billion to customers of its now shuttered lending program, following a settlement with a New York regulator.

Gemini will also pay a US$37 million fine to the regulator 鈥渇or significant failures that threatened the safety and soundness of the company,鈥 the New York Department of Financial Services (NYDFS) said in Wednesday.

NYDFS has the right to 鈥渂ring further action against Gemini if the company does not fulfill its obligation,鈥 it said in the statement.

Gemini is run by the Winklevoss twins, who are best known for spending years in litigation accusing Meta鈥檚 (META) Mark Zuckerberg of stealing their idea for Facebook and eventually received a US$65 million settlement.

In a Wednesday , the crypto exchange said that due to the settlement, customers of its lending program, Gemini Earn, would receive 100 per cent 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 per cent.

鈥淲e will be returning over US$1.8 billion in value (at today鈥檚 prices),鈥 according to the Gemini blog, which it said was US$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鈥檚 settlement doesn鈥檛 mean Gemini鈥檚 legal problems are over. It faces a separate lawsuit filed in October by New York鈥檚 attorney general accusing three companies 鈥 Gemini, GCC and Digital Currency Group, the parent firm of GCC 鈥 of lying to investors and covering up more than US$1 billion in losses.

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