The New York State Department of Financial Services has recently initiated an investigation into the cryptocurrency exchange Gemini amid allegations regarding inaccuracies in their “Earn” lending program reporting.
Gemini Is Under Investigation for a Possible False Statement
The Department of Financial Services in New York State, the authority overseeing firms within the state’s BitLicense regime, including Gemini, is reportedly investigating allegations that many users believe their Earn account assets are backed by Federal Deposit Insurance Corporation protection. This comes after five crypto companies making similar claims were served a cease and desist order from this government agency, FTX US included.
It remains undetermined whether Gemini has breached Federal laws, given that some clients may have incorrectly assumed their Earn products were protected by FDIC. As stipulated in the Federal Deposit Insurance Act, it is illegal to create a false impression of deposit insurance coverage or mislead people about its extent and manner.
Genesis’ Bankruptcy Also Affected Gemini
Last November, Genesis – the crypto lender behind Earn in collaboration with Gemini– was forced to put a stop to withdrawals due to “unprecedented market turmoil.” Subsequently, they even went as far as filing for Chapter 11 bankruptcy in January. Reports estimated that up to $900 million of users’ funds within Earn were rendered inaccessible.
Since the Earn program debacle, Gemini has been facing a barrage of criticism from both regulators and crypto users alike. In January, it was charged by the U.S. Securities and Exchange Commission with offering unregistered securities through Earn, while investors also launched legal proceedings against its founders, Tyler and Cameron Winklevoss – accusing them of fraud.
Authorities Did Not Make a Statement on This Issue
Although the New York Department of Financial Services declined to comment, rumors regarding the Gemini investigation have circulated and may lead to drastic alterations in the cryptocurrency market. To keep our readers updated on these developments, we will closely monitor any future news stories about this topic.
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