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The New York State Department of Financial Services (NYDFS) is reportedly investigating allegations made by cryptocurrency exchange Gemini regarding assets in its Earn Lending program.
Axios reported Wednesday that the “New York state agency that regulates Gemini” has launched an investigation after many users implied that assets in their Earn accounts were protected by the Federal Deposit Insurance Corporation (FDIC). It is said that it is going. Advertisement of FDIC protection for uninsured assets may be illegal. The FDIC previously issued a restraining order against five cryptocurrency companies making similar claims, including FTX US.
Under the Federal Deposit Insurance Act, it is prohibited to “represent or imply that an uninsured product is insured by the FDIC or knowingly misrepresent the scope and methods of deposit insurance.”
Crypto lending Genesis, which partners with Gemini and is responsible for running the Earn Program, suspended withdrawals in November 2022, citing “unprecedented market turmoil.” The company then filed for Chapter 11 bankruptcy protection in January 2023. Reports at the time suggested that up to $900 million in Earn user funds may have been locked.
