Gemini Earn customers will receive 100% of their locked-up holdings – potentially north of $1.1 billion – from the now-defunct program after a settlement with the New York Department of Financial Services, NYDFS announced Wednesday afternoon.

As part of the settlement, Gemini will give Genesis – which provided services that helped Earn function – $40 million for its bankruptcy proceedings, which are ongoing, and pay $37 million to NYDFS. And, according to a press release, Gemini “has committed” to having $1.1 billion for its Earn customers by the time Genesis wraps up its bankruptcy proceedings. In a tweet, Gemini said this would amount to 100% of customers’ assets, received in-kind, assuming a bankruptcy court signs off on the agreement.

“Gemini commits to working through the bankruptcy process to ensure that Earn Customers make a full recovery of their virtual currency,” NYDFS said.

Earn was a product that let Gemini customers earn interest on cryptocurrency investments. Genesis supplied backend services for the program.

The regulator alleged that Gemini did not conduct due diligence on Genesis Global Capital, which was unregulated and later sued by the New York Attorney General’s office for fraud (Genesis Global Trading, another wing of the Genesis entity, previously had a NYDFS BitLicense, but was not part of the Earn program).

Genesis filed for bankruptcy in January 2023, naming Gemini as one of its 50 biggest creditors. Genesis had previously suspended customer withdrawals, which affected Gemini Earn customers.

On Wednesday, NYDFS noted that Genesis defaulted on about $1 billion in loans from Earn customers, harming about 200,000 different customers.

“In addition to Gemini’s failures related to Earn, the Department’s investigation revealed that Gemini engaged in unsafe and unsound practices that ultimately threatened the financial health of the company,” the press release said. “Gemini Liquidity LLC, an unregulated affiliate, collected hundreds of millions of dollars in fees from Gemini customers that otherwise could have gone to Gemini, substantially weakening Gemini’s financial condition.”

NYDFS reserved the right to sue Gemini if the company does not pay back the $1.1 billion “after the resolution of the [Genesis] bankruptcy.”

UPDATE (Feb. 29, 2024, 22:10 UTC): Clarifies details of what Earn customers will receive.