Photo Illustration: Natalie Peeples/Axios. Photo: Astrid Stawiarz/Getty Images
Customers who put their cash and cryptocurrency into Gemini Earn thought it was secure, akin to a savings account at a bank. "It sounded really safe," Peter Chen, a data scientist in San Diego, who started putting money in Earn in late 2021, told Axios.
Why it matters: Chen was especially reassured when Gemini customer service sent him an email and mentioned FDIC insurance — the protection that keeps bank deposits safe in the U.S. But his money, since converted to cryptocurrency, wasn't safe.
How it worked: Launched by the famed twins Cameron and Tyler Winklevoss, Earn promised to pay interest rates of as much as 8% to depositors.
What happened: In June, Chen watched the collapse of another stablecoin — called luna — and got nervous. He sent an email to Gemini customer service, viewed by Axios, and asked: "Will something like this happen to GUSD? Is my money safe?"
Worth noting: The FDIC in August warned five companies about making misleading statements about deposit insurance — that's the protection that keeps your money safe in the bank — though Gemini wasn't included.
Driving the news: Last week, the SEC filed a complaint against Gemini and its partner, Digital Currency Group's Genesis Global Capital, claiming that Earn violated the law by offering unregistered securities.
For the record: "Super lame," Tyler Winklevoss tweeted after the SEC charges were filed. Gemini is working on getting users their funds, he said. "This action does nothing to further our efforts and help Earn users get their assets back. Their behavior is totally counterproductive."
Zoom out: There's a perception that crypto investors were wild, risk-taking, Lambo owners — or aspiring owners. Types who understood the wild ride they were on.
What they're saying: "You are seeing normal 'middle-class' folks, putting in life savings. Sometimes this is it. All of it," said Hee-Jean Kim, a lawyer at Kim & Serritella LLP, which filed a class action against Gemini at the end of December.
Were you an Earn customer? We'd like to hear your story. Email: [email protected]
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