Crypto exchange Gemini has agreed to a $50 million settlement to resolve fraud claims related to its Gemini Earn program. This comes after a crackdown on crypto-related lending programs in New York, where authorities say the settlement will reinstate defrauded investors and warn crypto firms of associated practices.

Gemini's $50 Million Settlement

The company will resolve a lawsuit filed by New York's Attorney General Letitia James, which accused Gemini of lying to over 230,000 users of its Gemini Earn Program. According to the consent judgment, Gemini will pay about $50 million through complete restitution to affected users. This means that investors will receive their cryptocurrencies back in the same amount and types they originally loaned.

The lawsuit was filed in October, accusing Gemini of not disclosing the risk posed by Gemini Earn. The company described the program as a low-risk investment, but investigations showed risky financials. According to James, at least 29,000 New York residents had their trust broken through the program, and the settlement will reinstate investors and serve as a reminder to cryptocurrency companies.

Investors will not be required to take any action and will access their cryptocurrencies in their accounts. Additionally, Gemini is banned from operating crypto lending programs in New York either directly or indirectly.

New York Ban

In addition to the settlement fees, Gemini is permanently restrained and enjoined from directly or indirectly engaging in the lending of any cryptocurrency in the State of New York. However, if future legislation allows crypto lending programs in New York, the company will seek the OAG's permission to waive compliance with this provision.