Gemini Receives Arbitration Support, Not Liable for Earn Lending Program Meltdown

BlockBeats News, August 31st, according to CNBC, Gemini Space Station won a legal victory in August, as an arbitrator ruled that the cryptocurrency exchange did not mislead users and was not responsible for the collapse of its Earn lending program.

The claim was filed by a user of the digital asset lending program Earn in late 2024. According to the ruling, there was not enough evidence to prove that Gemini lied to customers or was negligent in its due diligence with its primary lending partner, Genesis Global Capital.

The Earn program was launched in 2021, allowing users to earn up to a 7.4% annualized yield by lending their cryptocurrency. Under this program, Gemini lent assets to institutional borrowers, with Genesis acting as an intermediary. However, Gemini suspended withdrawals from the Earn program in November 2022, angering some of its over 300,000 users. This action came shortly after Genesis paused new loan originations and redemptions due to a liquidity crisis caused by the crypto market downturn that year.

Following the withdrawal freeze in Earn, multiple customers filed legal complaints against Gemini. The New York Attorney General also sued Gemini over the Earn program, reaching a $50 million settlement with the company in 2024. In February 2024, Gemini announced that the company had reached a "principled settlement" with Genesis and other creditors in the Genesis bankruptcy case. Three months later, Earn users received $2.18 billion in digital assets in-kind, equivalent to 97% of the owed digital assets to Earn users, which was $1 billion more than what was available when Genesis halted withdrawals in 2022.