Business ProfileforGemini Trust Company, LLC

The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

On 6/14/2024, New York Attorney General Letitia James announced that her office has recovered approximately $50 million from the cryptocurrency platform Gemini Trust Company, LLC (Gemini) for more than 230,000 investors, including at least 29,000 New Yorkers, who invested in the Gemini Earn program and were defrauded. Gemini allegedly misled thousands of investors on the risks associated with Gemini Earn, an investment program it offered with another cryptocurrency company, Genesis Global Capital (Genesis). The settlement provides all defrauded investors full recovery of the assets they invested in the Earn program but were unable to withdraw when the investment program collapsed. Today’s settlement follows Attorney General James’ $2 billion settlement with Genesis, resolves claims against Gemini, bans Gemini from operating any cryptocurrency lending program in New York, and requires the company to cooperate with the Office of Attorney General’s (OAG) litigation against Digital Currency Group (DCG), DCG’s CEO Barry Silbert, and Genesis’ former CEO Soichiro Moro.  

Under today’s settlement, Gemini will return approximately $50 million worth of digital assets to Gemini Earn investors who were locked out of their accounts. Investors do not need to take any action to recover their digital assets and they will be able to access their digital assets in their accounts. 

In October 2023, Attorney General James sued Gemini for lying to investors about its Gemini Earn program. Gemini repeatedly assured investors that investing with Genesis through their Gemini Earn program was a low-risk investment. However, OAG’s investigation found that Gemini’s internal analyses of Genesis showed that the company’s financials were risky. The lawsuit alleged that Gemini knew Genesis’ loans were under-secured and at one point highly concentrated with one entity, Sam Bankman-Fried’s Alameda, but did not reveal this information to investors. Last month, Attorney General James secured $2 billion from Genesis for defrauded victims. 

The following describes a pending government action that has been formally brought by a government agency but has not yet been resolved. We are providing a summary of the governments allegations, which have not yet been proven.

On 1/12/2023, the Securities and Exchange Commission charged Genesis Global Capital, LLC and Gemini Trust Company, LLC for the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program. Through this unregistered offering, Genesis and Gemini raised billions of dollars’ worth of crypto assets from hundreds of thousands of investors. Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.

According to the complaint, in December 2020, Genesis, part of a subsidiary of Digital Currency Group, entered into an agreement with Gemini to offer Gemini customers, including retail investors in the United States, an opportunity to loan their crypto assets to Genesis in exchange for Genesis’ promise to pay interest. Beginning in February 2021, Genesis and Gemini began offering the Gemini Earn program to retail investors, whereby Gemini Earn investors tendered their crypto assets to Genesis, with Gemini acting as the agent to facilitate the transaction. Gemini deducted an agent fee, sometimes as high as 4.29 percent, from the returns Genesis paid to Gemini Earn investors. As alleged in the complaint, Genesis then exercised its discretion in how to use investors’ crypto assets to generate revenue and pay interest to Gemini Earn investors.

The complaint further alleges that, in November 2022, Genesis announced that it would not allow its Gemini Earn investors to withdraw their crypto assets because Genesis lacked sufficient liquid assets to meet withdrawal requests following volatility in the crypto asset market. At the time, Genesis held approximately $900 million in investor assets from 340,000 Gemini Earn investors. Gemini terminated the Gemini Earn program earlier this month. As of today, the Gemini Earn retail investors have still not been able to withdraw their crypto assets.

The SEC’s complaint alleges that the Gemini Earn program constitutes an offer and sale of securities under applicable law and should have been registered with the Commission.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Genesis and Gemini with violations of Sections 5(a) and 5(c) of the Securities Act of 1933. The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties.