Gemini, the cryptocurrency exchange owned by the Winklevoss twins, has announced that it is returning $2.2 billion to users of its Earn program, after the program stopped withdrawals 18 months ago, CNBC reports. The move comes after the New York attorney general reached a major settlement with Gemini's lending partner, Genesis.

Refunding Cryptocurrency Lending Users

With a settlement of more than $2 billion, investors are expected to fully recoup their losses, which is a major victory for those affected.The settlement between Gemini and Genesis was reached under the supervision of the New York Attorney General.

Gemini's Earn program, which launched in 2021, is designed to provide users with the opportunity to earn substantial returns on their cryptocurrency holdings. By participating in the program, users entrust their assets to Gemini, which then provides loans to institutional borrowers through Genesis Global Capital.

However, the program faced challenges in November 2022, when Genesis halted new loan originations and redemptions, prompting Gemini to suspend withdrawals. Nevertheless, Gemini promised to return 100 percent of its digital assets to Earn program users. The company's approach, coupled with regulatory intervention, paved the way for a significant recovery for affected investors.

Gemini reportedly emailed subscribers to say that the initial Earn distribution, which represents about 97 percent of the funds Genesis owes subscribers, had been deposited into Gemini accounts. The cryptocurrency exchange said the distribution follows the settlement and an agreement with Genesis and other creditors that Earn subscribers will be repaid in full. This repayment amounted to $2.18 billion, which is 232 percent of the amount that users were reimbursed.

New York Attorney General Lawsuit

Last year, New York Attorney General Letitia James sued Gemini, Genesis, and Digital Currency Group, alleging that they orchestrated a fraudulent scheme that misled more than 230,000 investors and resulted in losses of more than $1 billion.

The lawsuit alleges that Gemini misled investors about the safety of its partnership with Genesis, while Genesis and DCG concealed large losses. Investors were told that their money would be safe and grow through the Gemini Earn program, which promised to generate profits by lending assets to third parties. However, the Attorney General's investigation revealed that this was not the case.

These losses were caused by defaults by major borrowers such as Three Arrows Capital and Babel Finance, totaling more than $1.2 billion. Despite these significant financial setbacks, Genesis and DCG allegedly misled investors by falsely claiming that the losses had been absorbed through promissory notes.