Arbitrator Finds Gemini Not Responsible for Earn Program Collapse

An arbitrator has ruled that Gemini Space Station was not responsible for the collapse of its Earn lending program, finding insufficient evidence that the cryptocurrency exchange misled customers or failed to conduct adequate due diligence on its lending partner, Genesis Global Capital, according to CNBC.

The ruling, issued Aug. 12, stemmed from a claim filed in late 2024 by a Gemini Earn customer seeking damages for emotional distress related to the program’s failure. The arbitrator found that the claimant had not established the elements necessary to support the claim, including a breach of duty by Gemini or a direct connection between the company’s conduct and the alleged harm, CNBC reported Monday (Aug. 31).

The decision instead pointed to Genesis and its parent, Digital Currency Group (DCG), as responsible for the problems that ultimately brought down Earn. Arbitrators described the alleged fraud at Genesis as extensive, saying it had gone undetected by the company’s auditors, DCG’s auditors and regulatory authorities until Gemini uncovered it.

Gemini launched Earn in 2021, allowing customers to earn annual yields of as much as 7.4% by lending their digital assets through Genesis to institutional borrowers. Genesis halted new loan originations and redemptions in November 2022 amid a broader crypto market liquidity crisis, prompting Gemini to suspend Earn withdrawals for more than 300,000 customers.

Earn customers ultimately recovered their digital assets through the Genesis bankruptcy process. In May 2024, users received $2.18 billion in assets, representing 97% of what they were owed at that point and about $1 billion more than the value of the assets when withdrawals were halted, CNBC reported.

The ruling does not resolve all of Gemini’s legal exposure related to Earn. More than a dozen customer disputes were still pending earlier this month, according to CNBC. Gemini also settled a separate case brought by New York’s attorney general for $50 million in 2024.

The developments come as Gemini expands beyond its core crypto exchange business. The company is expanding its prediction-market business through a partnership with Apex FinTech Solutions that will make Gemini Titan the exclusive regulated venue for crypto event contracts distributed through Apex’s futures commission merchant. In May, Gemini said it added an artificial intelligence (AI)-powered “personalized intelligence center” to its prediction market platform. The new Command Center surfaces real-time signals, market summaries and AI-generated intelligence to keep users informed about topics they select, PYMNTS reported at the time.