New York Recovers $50 Million For Defrauded Gemini Earn Crypto Investors

An anonymous reader quotes a report from Reuters: New York Attorney General Letitia James has recovered $50 million from the cryptocurrency platform Gemini Trust to repay investors defrauded in its Gemini Earn program, she said on Friday. Gemini, run by billionaire twin brothers Cameron and Tyler Winklevoss, will provide full recoveries to more than 230,000 Earn investors, including 29,000 in New York, and agreed to a ban on operating crypto lending programs in the state. The payout is in addition to James' related $2 billion settlement, opens new tab with crypto lender Genesis Global Capital, which she announced on May 20.

"Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts," James said. "Today's settlement will make defrauded investors whole." The funds will be accessible within seven days, Gemini told investors on Friday. "With this final distribution, Earn users will have received 100% of the assets owed to them," it said. [...] Investors are expected to recover more than they invested because they are being paid in digital assets such as bitcoin , whose value has more than tripled since redemptions were suspended.

Were the investors really defrauded?

[Anonymous Coward]

Here is the Wayback Machine's page on Gemini Earn from February 2022 [archive.org]

What are the risks of Gemini Earn?

Gemini is partnering with accredited third party borrowers including Genesis, who are vetted through our risk management framework which reviews our partnersâ(TM) collateralization management process. On a periodic basis we will conduct an analysis of our partnersâ(TM) cash flow, balance sheet, and financial statements to ensure the appropriate risk ratios and healthy financial condition of our

Re:Were the investors really defrauded?

[hey!]

General disclaimers about the *existence* of risk don't immunize a company from *misrepresenting* risk.

Risk is a fundamental aspect of valuing any speculative investment. So even if I'm dealing with sophisticated investors if I tell them I'm investing in A+ grade securities but I'm actually investing in B+ securities, I've still defrauded them, even if in the end I pay them the promised returns, because I've explosed to to *more* risk than the risk they were using in their value calculations.

skimpy on the details

[Big Hairy Gorilla]

I read the article. Yeah, not much there except for this which tells a story:

"Investors are expected to recover more than they invested because they are being paid in digital assets such as bitcoin"

So therefore digital assets such as bitcoin were what was recovered, right?
They kept the REAL assets and paid out in fairy dust.

Sounds like a big win for Gemini from what I can tell.

paid in digital assets

[xpyr]

So the investors are not actually getting their money back, but instead getting digital assets like bitcoin? I would want my actual money back.

Re:

[NicoNet]

Investors are getting back exactly what they put into it. If they put in 10 BTC, they are getting back 10 BTC. They can then sell for cash at current market rates or keep the crypto. No one put cash into the investment, it was all crypto. There is one "crypto" on that platform, GUSD, which is 1:1 to USD.

There are no "investors"

[vbdasc]

In the crypto world and the tulip trade. They're all gamblers.

Re:

[sound+vision]

They also weren't defrauded. Isn't deregulated/irregular finance what they were buying?