Crypto exchange Gemini has secured a significant legal win following a ruling from an arbitrator who determined the company was not responsible for the collapse of its Earn lending program. The decision comes after a user filed a claim in late 2024 alleging that Gemini had misled its customers. However, the arbitrator found that there was simply not enough evidence to suggest that Gemini lied to its users or failed to perform proper due diligence on its primary lending partner, Genesis Global Capital.
The ruling specifically addressed claims of negligent infliction of emotional distress, noting that the claimant failed to provide proof of any genuine threat to their physical safety or a direct causal link between Gemini’s actions and emotional harm. Instead of pointing toward Gemini, the arbitrator shifted the blame toward Genesis and its parent company, Digital Currency Group, led by Barry Silbert. The ruling described the fraud committed by Silbert and his associates as massive, stating that it remained undetected not only by Gemini but also by regulatory authorities and external auditors until it finally surfaced.
Launched in 2021, the Earn program promised users annual yields of up to 7.4 percent by lending out their cryptocurrency through Genesis. This arrangement soured in November 2022 when Gemini froze withdrawals for over 300,000 users after Genesis suffered a severe liquidity crisis during a broader market downturn. While many customers reacted with anger and subsequent legal action, including a fifty million dollar settlement with the New York Attorney General in 2024, recent developments have seen most funds returned.
By May of this year, Earn users had already recovered about ninety seven percent of their digital assets in kind through a bankruptcy settlement involving Genesis. Despite this recovery and the latest favorable arbitration ruling, Gemini continues to navigate several remaining disputes brought forward by disgruntled former participants of the lending scheme.