Hey, thanks for the report.
This is a known issue, and the team is working on a fix. Many users using their own Gemini API keys are getting 429 “Resource exhausted” errors, even when their quota isn’t used up.
It’s related to how Cursor routes requests to the Gemini API. It uses a regional endpoint instead of the global one, which can trigger rate limiting on Google’s side.
You can follow the discussion here: Gemini API key doesn't work with the latest Cursor version
Sadly, there isn’t a reliable workaround yet. The team is working on a code-level fix.