TL;DR:
The cryptocurrency exchange Gemini obtained a favorable ruling in an arbitration proceeding initiated in late 2024 by a user of its Earn program who sought damages for emotional distress stemming from the product’s collapse.
In its decision, the arbitrator concluded that the user presented no evidence of breach of duties, of a direct link between the exchange’s conduct and the alleged harm, or of a real or perceived threat to their physical integrity. CNBC was the first outlet to report the ruling.
Gemini Earn was a crypto asset lending service launched in 2021 that offered annual interest rates of up to 7.4% on assets such as Bitcoin. Unlike a traditional savings account, the product operated by lending customers’ assets through Genesis Global Capital to institutional borrowers.
The arrangement broke down in November 2022 when Genesis suspended withdrawals and new loan originations on November 16, amid the widespread crisis in the crypto market. Genesis filed for bankruptcy in January 2023, and more than 300,000 Earn users were left with their funds frozen.
New York’s attorney general subsequently alleged that the exchange had downplayed the program’s risks even as internal analyses warned about Genesis’s risky and under-collateralized lending practices, including its exposure to Alameda Research.
Gemini reached a settlement with the state for approximately $50 million and was barred from operating crypto lending programs in New York. Despite its collapse, the company indicated that distributions arising from the bankruptcy process allowed for the full restitution of all assets owed: approximately 97% was distributed in May 2024 and the remaining 3% in June, with assets returned in kind rather than converted to their 2022 values.
