Crypto Lending Crisis - Gemini and Genesis Charged by US SEC With Selling Unregistered Securities
The US Securities and Exchange Commission (SEC) brought charges against major crypto exchange Gemini and the troubled crypto lending and trading firm Genesis.
Per the press release issued by the regulator on January 12,
"The [SEC] today charged Genesis Global Capital, LLC and Gemini Trust Company, LLC for the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program."
The regulator alleged that through this unregistered offering, the two companies raised "billions of dollars" worth of crypto assets from "hundreds of thousands of investors."
The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains and prejudgment interest, as well as civil penalties.
The SEC’s complaint alleges that the Gemini Earn program constitutes an offer and sale of securities and that it should have been registered with the regulator. According to the SEC Chair Gary Gensler,
"We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors. Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws."
As a reminder, back in December 2020, Genesis, the parent company of which is Barry Silbert’sDigital Currency Group (DCG), partnered with Gemini, founded by the Winklevoss twins, to enable the exchange's customers to loan their crypto to Genesis in exchange for interest.
In February 2021, Genesis and Gemini launched the Gemini Earn program to retail investors, where Gemini deducted an agent fee from the returns Genesis paid to Gemini Earn investors.
Read more on cryptonews.com
