CNN –
Gemini Trust, a cryptocurrency exchange founded by Cameron and Tyler Winklevoss, will return at least $1.1 billion to customers of its now-defunct lending program following a settlement with a New York regulator.
Gemini will also pay a $37 million fine to the regulator “for significant failures that jeopardized the safety and soundness of the company,” the New York Department of Financial Services (NYDFS) said in a statement on Wednesday.
NYDFS has the right to “take further action against Gemini if the company fails to comply with its obligation,” the statement said.
Gemini is run by the Winklevoss twins, best known for being embroiled in years of legal battles accusing Meta (META)'s Mark Zuckerberg of stealing their idea for Facebook, and ultimately seeking compensation of up to 1,000 of $65 million.
In a blog post on Wednesday, the crypto exchange said that as a result of the agreement, customers of its lending program Gemini Earn would receive 100% of their digital assets back in kind, plus any appreciation.
Gemini Earn marketed itself as a low-risk investment where customers can lend crypto assets to another company, Genesis Global Capital (GGC), while earning interest payments of up to 8%.
“We will return over $1.8 billion in value (at today’s prices),” the Gemini blog says. That is $700 million more than when GGC stopped withdrawals in November 2022.
At this point, the trillion-dollar crypto market collapsed due to the collapse of FTX, the once-successful crypto exchange. Its co-founder, Sam Bankman-Fried, was convicted in November of seven counts of fraud and conspiracy for his role in the company's demise.
On Tuesday, Bankman-Fried's lawyers filed a memo in federal court in Manhattan recommending a prison sentence of between five and six and a half years. According to federal guidelines, he faces a maximum of 110 years. His sentencing is scheduled for March 28.
Wednesday's settlement doesn't mean Gemini's legal troubles are over. New York's attorney general filed a separate lawsuit in October accusing three companies – Gemini, GCC and Digital Currency Group, GCC's parent company – of lying to investors and covering up more than $1 billion in losses .