Gemini, the cryptocurrency exchange founded by Cameron and Tyler Winklevoss, has reached a significant settlement agreement with the New York Attorney General (NYAG) Letitia James, involving a payment of $50 million worth of digital assets to resolve allegations of misleading investors through its Gemini Earn program.

The settlement, announced on Friday by NYAG Letitia James, follows accusations that Gemini "misled thousands of investors," including residents of New York, regarding the risks associated with its Gemini Earn initiative. This program allowed customers to lend their cryptocurrencies to Genesis Global Capital, LLC, which later filed for bankruptcy, promising returns of up to 7.4% Annual Percentage Yield (APY).

In her statement, NYAG Letitia James criticized Gemini for marketing the Earn program as a safe way for investors to grow their funds while allegedly deceiving them and restricting access to their accounts when the investment vehicle collapsed.

"Today’s settlement will make defrauded investors whole and should remind cryptocurrency companies that deceiving investors is illegal and will not be tolerated by my office," stated NYAG Letitia James.

Under the terms of the settlement, all affected investors will receive full recovery of the assets they had invested in the Earn program but were unable to withdraw when Genesis Global Capital encountered financial difficulties. Additionally, Gemini is prohibited from offering any crypto lending programs in the state of New York moving forward.

The NYAG initially filed its complaint in October against Gemini, Genesis Global Capital, and Digital Currency Group (DCG), alleging that Gemini had misled investors about the risks associated with its lending program. The lawsuit also accused DCG and Genesis of concealing significant losses amounting to $1.1 billion through deceptive practices.

Gemini responded to the settlement by confirming that Earn program users will receive their funds back in-kind, totaling $2.18 billion, representing a substantial recovery of 232% from the time withdrawals were suspended in November 2022.

In a statement addressing its customers, Gemini expressed its commitment to delivering the final Earn distributions promptly, within seven days, and acknowledged the support and patience of its users throughout the settlement process.

"We are excited to deliver this full recovery to you and appreciate your ongoing patience and support throughout this process," Gemini stated.

The resolution of this case underscores the regulatory scrutiny faced by cryptocurrency platforms, emphasizing the importance of transparency and accountability in their operations to protect investor interests.