Genesis Agrees to Pay $21M Fine to Settle SEC Crypto Lending Charges
Bankrupt cryptocurrency lender Genesis Global Capital has agreed to pay a $21 million fine as part of a final court judgement to settle charges with the U.S. Securities and Exchange Commission (SEC).
In an official ruling released on March 19, the SEC highlighted the reason for the penalty is related to Gemini Earn.
The Gemini Earn program, created by the Gemini exchange, allows investors to earn up to 7% APY via its interest-earning program. Gemini partnered with Genesis as its lending partner for the Earn product.
SEC Chairman Gary Gensler explained the regulatory enforcement, saying, “We charged Genesis with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements designed to protect investors.”
In November 2022, following the implosion of FTX, Genesis paused withdrawals from Gemini Earn customers, which froze assets of thousands of Earn customers. At the time, Gemini Earn customers had approximately $900 million in assets locked up in Genesis.
Today’s settlement with the SEC concludes over 14 months of court proceedings. The financial watchdog also explained that Genesis consented to a final judgement that imposes a permanent ruling prohibiting them from engaging in future violation of registration provisions in federal securities laws.
“Today’s settlement builds 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,” Gensler noted in the release. “Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law.”
According to the press release, the $21 million civil penalty will only be
Read more on cryptonews.com
