Is Gemini Safe? (Read Before You Trade)

What is Gemini?

Gemini is a New York-based exchange founded in 2014. The platform has millions of users and supports more than 70 cryptocurrencies. Gemini is known for its focus on regulatory compliance, and is one of the few exchanges available in all 50 states. 

What security features does Gemini have?

Let’s walk through some of Gemini’s security features:

• Cold storage and custody controls: Gemini stores the majority of customer assets in offline cold storage.
• Account protections: Users can enable two-factor authentication, set up address whitelisting, and use hardware security keys.
• Proof of Reserves (PoR): Gemini has released proof-of-reserve attestations to verify that it is holding reserves to back up customer funds. 
• Security certifications: Gemini’s security is third-party verified. The exchange has completed SOC 2 audits and holds ISO 27001 certification.
• Bug bounty program and monitoring: Gemini runs a coordinated bug bounty program to help identify vulnerabilities and conducts annual penetration testing.

Has Gemini ever been hacked?

Gemini has not reported any hacks resulting in the loss of customer funds. However, in 2022, a data breach related to a third-party exposed some customer emails and phone numbers. Gemini says no crypto funds were lost.

Is Gemini FDIC insured?

Crypto on Gemini is not FDIC insured. Generally, cryptocurrency is not subject to FDIC protection.

What legal and regulatory issues has Gemini faced?

While Gemini has mostly remained in good regulatory and legal standing, the exchange faced criticism for its Gemini Earn program. 

Gemini partnered with Genesis Global Capital to let customers earn interest on cryptocurrency. In late 2022, Genesis froze withdrawals and later filed for bankruptcy, leaving Gemini Earn customers unable to access their assets.

Gemini specified that this was issue with Genesis. This scandal only impacted Gemini customers using Gemini Earn, and all impacted customers were reimbursed 100% by 2024. 

In 2024, Gemini reached a settlement with New York regulators and paid a $31 million fine for failing to properly disclose its relationship with Genesis. 

Is Gemini legal in the U.S.?

Yes. Gemini is a licensed cryptocurrency exchange available in all 50 states. 

Why should I use Gemini?

Gemini is a strong choice for investors who want a secure, regulated exchange with a user-friendly app and low fees for advanced traders. 

What are the risks of using Gemini?

Custodial risk: Any cryptocurrency held on a centralized exchange can potentially be lost if the company is hacked or goes bankrupt. The Gemini Earn scandal highlights how even regulated platforms can expose customers to risk.

Account-level threats: Scams like phishing and malware can compromise your Gemini account. Remember, do not hand over account information to anyone (including scammers posing as Gemini support reps). 

To avoid security issues, it’s recommended to use two-factor authentication and whitelist trusted wallet addresses. In addition, you should move long-term holdings to a hardware wallet, which stores your private keys offline.

Does Gemini report to the IRS?

Gemini requires Know Your Customer (KYC) verification for customers. 

Like other U.S. brokers, it will issue Form 1099-DA to customers and the IRS starting in 2026 reporting capital gains and losses. Remember, you are required to report your crypto income from Gemini and other platforms to the IRS. 

Conclusion

Gemini is considered a safe exchange with strong security features. Still, the Gemini Earn scandal shows that even reputable exchanges come with risks.