NYDFS settlement with Gemini could deliver $1.1 billion to Earn customers

• Today's announcement would appear to be a win for them.

Catch up quick: Customers of the Gemini Earn program — in which Genesis was a lending partner — saw withdrawals halted in Nov. 2022 and stuck in Genesis' longer-than-expected bankruptcy proceeding.

• Customers had thought their money was as secure as a bank's savings account, reassured by mentions of FDIC insurance.

Between the lines: NYDFS head Adrienne Harris said the regulator had the right to bring further action against Gemini if it didn't fulfill its obligation to return at least $1.1 billion to those customers, following the resolution of the Genesis bankruptcy.

• Gemini pledged to contribute $40 million to the bankruptcy proceeding and pay a $37 million fine to DFS.
• NYDFS granted a charter to Gemini in 2015 to operate in the state.

The big picture: Harris's office is emerging as the crypto hammer in the state.

• The department's agreement with Gemini runs into a separate settlement reached recently between Attorney General Letitia James and Genesis.
• The settlement included an expansion of the original suit, tripling the original alleged fraud to more than $3 billion.
• Digital Currency Group subsequently filed an objection with the bankruptcy court, pushing back on the expanded lawsuit as well as the settlement with its subsidiary, saying it wasn't a proper settlement under the bankruptcy code.

What we're watching: Which state regulator becomes the people's champion will depend on the bankruptcy court's decision.