Gemini cryptoasset exchange settles $37m with DFS

On 28 February 2024, New York’s Department of Financial Services (DFS) announced a settlement with Gemini Trust Company (“Gemini”) which required Gemini to return over $1bn to their customers and pay a $37m fine for multiple compliance failures.

Given the limited nature of any UK regulatory enforcements to date within the Cryptoasset sector, this notice (issued to a Crypto Exchange) provides insight into the expectations that all firms in the Digital Asset sector may expect to be subject to in the future. It goes without saying that the areas covered within this notice are applicable cross-sector and our gap analysis may help to condense some of the key findings.

The notice predominantly focused on Governance failures but also included themes such as Due Diligence (across both Third Parties and Customers), Transaction Monitoring, Liquidity Reserves, False Representations and effectiveness of Internal Audit.

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