Gemini wins arbitration over claims tied to failed Earn program

Gemini won an arbitration ruling earlier in August after an Earn customer failed to establish that the crypto exchange misled users or neglected its due diligence when working with Genesis Global Capital.

The claim, filed in late 2024, sought damages tied to emotional distress following the collapse of Gemini’s Earn lending program.

In its Aug. 12 decision, the arbitrator said the claimant provided no evidence of a breach of duty, a direct connection between Gemini’s conduct and the alleged harm, or an actual or perceived threat to physical safety. CNBC was first to report the ruling.

Gemini Earn was a yield-generating crypto-lending service introduced in 2021, offering customers interest rates of up to 7.4% a year on assets including Bitcoin. Rather than functioning like a traditional savings account, the product involved lending customer crypto through Genesis Global Capital to institutional borrowers.

The arrangement broke down in November 2022 after Genesis halted withdrawals and new loan originations on Nov. 16 during the wider crypto-market crisis. More than 300,000 Earn users were affected, and Genesis filed for bankruptcy in January 2023.

The New York attorney general later alleged that Gemini had downplayed the risks of Earn even as internal analyses raised concerns about Genesis’ risky and under-secured lending, including exposure to Alameda Research.

The eventual bankruptcy distributions restored all crypto owed to Earn users, according to Gemini. Around 97% was distributed in May 2024 and the remaining 3% in June, with assets returned in kind rather than converted into cash at their 2022 values.

Gemini also settled with New York for about $50 million and was barred from running crypto-lending programs in the state.