CORRECTION (Jan. 30, 18:26 UTC): An earlier version of this article incorrectly drew the conclusion that Gemini is being investigated by the New York Department of Financial Services specifically for misrepresenting that its EARN accounts were backed by the FDIC.
Cryptocurrency exchange Gemini reportedly implied to customers that their assets in its interesting-bearing Earn product were safe because they were backed by the Federal Deposit Insurance Corp (FDIC), Axios reported on Monday.
According to the report, Gemini's discussions with customers referred to the FDIC, but appeared to be in reference to the firm's deposits at other banks, as opposed to its own products, a distinction which customers did not seem to understand.
It is against the law for a financial firm to imply that an uninsured product is FDIC-insured.
The New York Department of Financial Services (NYDFS) is investigating Gemini, according to the Axios report.
The New York Department of Financial Services (NYDFS) is investigating Gemini, according to the Axios report.
Gemini had not responded to CoinDesk's request for an official comment on the matter at press time.
The exchange halted withdrawals from its Earn product in November last year amid the fallout from the collapse of fellow exchange FTX.
Around $900 million is estimated to be frozen on the platform as a result. Gemini blamed the halt on a similar freeze at the now-bankrupt crypto lender Genesis, where Gemini has invested its customers' funds. Genesis and CoinDesk are both owned by crypto conglomerate Digital Currency Group.
The FDIC and the NYDFS both declined to comment.
